Electoral bonds scheme allows anonymity to political donors to protect them from “political victimisation,” the government informed the Supreme Court.
The Ministry of Finance dismissed the Election Commission of India’s (ECI) version that the invisibility afforded to benefactors was a "retrogade step" and would wreck transparency in political funding.
But the government said the shroud of secrecy was a product of “well thought-out policy considerations”. It said the earlier system of cash donations had raised a “concern among the donors that, with their identity revealed, thPere would be competitive pressure from different political parties receiving donation”.
“Non-disclosure of the identity of the donor is the core objective of the scheme of electoral bonds in order to safeguard the donor from political victimisation… In any event, non-maintenance of the identity of the donor of electoral bond by political parties was driven by well thought out policy considerations,” the government reasoned.
The government said electoral bonds achieve the twin purposes of greater accountability in political funding as well as anonymity of the donor. If required, enforcement agencies can always check the details of donors from banking channels.
Protection of the identity of donors is also a reason why political parties are exempted from recording donations received through electoral bonds in their Contribution Reports to the ECI.
The ECI had flagged how donors need not provide their names, address or PAN if they have contributed less than Rs. 20,000. Now, many political parties are reporting donations less than Rs. 20,000. The poll body has a hit a wall in its enquiries whether these donations are sourced illegally from government companies or foreign sources.
But the ministry said reforms like electoral bonds were a reflection of the reduced corrupt practices in political funding. To prove its point, the Ministry of Finance refers to Corruption Perception Index of 2018 published by Transparency International. The government turned the spotlight on how India jumped several points to 78 in the corruption index from its earlier position 94, where it had been lying stagnant since 2012.
With this, the government has taken the Election Commission of India (ECI) head-on on the issue of electoral bonds even as there are only a few more days to go before Lok Sabha polls kick off on April 11.
ECI had recently lashed out at the electoral bonds scheme, saying it would open the doors for pumping in black money. It referred to how it had warned the government way back in May 2017.
The government however said the poll body was not kept in the dark. The Secretary, Department of Economic Affairs, had briefed the ECI on electoral bonds in September 2017. The ECI’s suggestions, contained in a letter dated March 15, 2017 on amendments in the Income Tax Act, were “duly examined through the Finance Act of 2017 and carried out”, the government submitted.
The government said electoral reforms usher in a “marked shift” from the old system of massive cash donations to political parties.
The identity of neither the donor nor the recipient political party was known. There was no accountability on how the cash was spent. Political funding had become a “parallel economy”. Political parties were floated merely to generate and handle tainted cash