Campaign Finance Laws: Post Electoral Bonds Ruling Reforms
- ByAdmin --
- 26 May 2025 --
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Campaign finance remains a critical area in ensuring transparency, fairness, and integrity in India’s electoral process. The introduction of electoral bonds in 2018 aimed to streamline political donations, yet it has also attracted significant legal scrutiny over transparency and accountability concerns. Following the Supreme Court’s landmark rulings on electoral bonds, 2024 has seen renewed discussions and proposed reforms aimed at strengthening campaign finance laws to better regulate political funding and safeguard democratic processes.
Background: Electoral Bonds and Legal Controversies
- Electoral Bonds Scheme, 2018
Introduced by the Finance Ministry, electoral bonds are bearer instruments that allow individuals and corporations to donate to political parties anonymously through authorized banks. The stated objective was to curb black money and enhance transparency by routing donations through the banking system.
- Concerns and Criticism
Critics argue that electoral bonds promote opacity, as donor identities are concealed from the public and even from Election Commission of India (ECI), undermining voters’ right to know who funds political parties. The scheme has been challenged in the Supreme Court on grounds of violating the right to information and transparency norms under the Representation of the People Act, 1951.
Supreme Court Rulings and Directives
- Key Judgments
In 2022 and 2023, the Supreme Court delivered significant interim and final rulings on electoral bonds:- The Court upheld the constitutionality of electoral bonds but mandated greater transparency measures.
- It ordered the government to ensure that the ECI receives full information on donors, although this data is not publicly disclosed.
- The Court emphasized the need for effective oversight to prevent misuse of electoral bonds for laundering money or influencing elections improperly.
- The Court upheld the constitutionality of electoral bonds but mandated greater transparency measures.
- Impact of Rulings
These judgments prompted the government and the ECI to review existing procedures and enhance mechanisms for financial disclosure and audit.
Post-Ruling Reforms and Government Actions in 2024
- Amendments to the Representation of the People Act, 1951
Proposals to amend the RPA focus on:- Mandating periodic disclosures of aggregate donations received via electoral bonds to the ECI.
- Strengthening penalties for non-compliance or submission of false information in financial reports.
- Mandating periodic disclosures of aggregate donations received via electoral bonds to the ECI.
- Enhanced Monitoring by Election Commission
The ECI has been empowered to:- Audit political parties’ accounts with stricter scrutiny on electoral bond receipts.
- Demand detailed reports from banks handling electoral bonds to track suspicious transactions.
- Audit political parties’ accounts with stricter scrutiny on electoral bond receipts.
- Public Awareness and Civil Society Engagement
Initiatives to educate voters on campaign finance and political donations aim to foster greater public demand for transparency.
Legal Framework Governing Campaign Finance
- Representation of the People Act, 1951:
- Sections 29C and 29D regulate the maintenance of accounts and submission of expenditure reports by political parties and candidates.
- Section 13A of the Income Tax Act provides tax exemptions to political parties conditional on audited accounts and disclosures.
- Sections 29C and 29D regulate the maintenance of accounts and submission of expenditure reports by political parties and candidates.
- Foreign Contribution (Regulation) Act, 2010 (FCRA):
Controls foreign donations to political entities, ensuring no foreign interference in elections.
- Companies Act, 2013:
Limits corporate donations to political parties to 7.5% of the average net profits of the preceding three years.
Challenges and Continuing Concerns
- Anonymity vs. Transparency
Electoral bonds’ anonymity continues to raise concerns about undisclosed influence over political parties and possible quid pro quo arrangements.
- Inadequate Public Disclosure
Despite court mandates, the general public still lacks access to detailed donor information, limiting electoral accountability.
- Potential for Misuse
Cases of suspected misuse and money laundering through electoral bonds have been reported, highlighting enforcement gaps.
- Implementation of Reforms
Effective monitoring depends on inter-agency coordination and political will, which remain uneven.
Recommendations and Future Directions
- Full Disclosure of Donor Details
Amend laws to mandate public disclosure of electoral bond donors to enhance voter knowledge and electoral integrity.
- Strengthen ECI’s Investigative Powers
Provide the Election Commission with enhanced authority to investigate suspicious financial flows and penalize violations promptly.
- Independent Audit Mechanisms
Establish independent audit bodies for political party finances, reducing reliance solely on party-submitted accounts.
- Civil Society and Media Oversight
Encourage greater role for watchdog organizations and investigative journalism in exposing campaign finance irregularities.
Conclusion
The Supreme Court’s rulings on electoral bonds have brought the spotlight back to campaign finance transparency in India. While the electoral bonds scheme was designed to curb black money and improve donation processes, legal scrutiny has revealed significant challenges regarding transparency and accountability. The ongoing reforms in 2024 reflect a cautious but necessary step toward strengthening the legal framework governing political funding. For India’s democracy to thrive, reforms must balance privacy for donors with the public’s right to transparency, reinforced by robust oversight and enforcement.
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