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Constitutional Bench of SC to hear Pleas against the Electoral Bond

Utkarsh Classes 31-10-2023
Constitutional Bench of SC to hear Pleas against the Electoral Bond Government Scheme 5 min read

A five-judge Constitution bench of the Supreme Court on 31st October 2023 began  hearing a bunch of petitions challenging the legality of the electoral bonds scheme for funding the political parties. The case is being heard by a five member Constitutional Bench chaired by Chief Justice of India (CJI) D.Y. Chandrachud. The other members of the bench are Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra. 

What Are Electoral Bonds?

  • The Electoral Bonds were introduced in India through the Finance Act 2017.
  • It is a type of bearer bond that allows people and organizations to make anonymous contributions to political parties. 
  • The Indian government announced the Electoral Bonds Scheme in January 2018.
  • The electoral bond would be a bearer instrument which is also an interest-free banking instrument.

Who can buy Electoral bonds? 

  • Electoral Bonds can be purchased by an Indian citizen or a company registered in India.
  • These bonds are available in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.

Authorized Issuer of Electoral Bonds 

  • The Electoral Bonds may only be encashed by an eligible Political Party using a bank account with the Authorized Bank.
  • The State Bank of India (SBI) has been granted permission to issue and redeem Electoral Bonds through its Authorized Branches.
  • Authorized Issuer - State Bank of India.

Eligibility Criteria for Political Parties

  • Electoral bonds can only be given to political parties that have been registered under the Representation of the Peoples Act of 1951 with the Election Commission of India.
  • The eligible  political party must get at least 1% of the valid votes cast in the Lok Sabha  or a state Legislative Assembly election to participate in the Electoral Bonds Scheme.

Electoral Bonds -Validity Period

  • Electoral bonds can be encashed by political parties to cover their election-related costs within 15 days of issuance. 
  • These electoral bonds can be purchased during the first ten days of January, April, July, and October months .
  • In a general election year, the Central government can set an additional 30-day time frame for purchasing of Electoral Bonds.

What is the controversy over Electoral Bonds?

  • The lack of transparency in funding sources is one of the primary criticisms regarding electoral bonds.
  • The identity of the contributor is not revealed to the public or the Election Commission, making it difficult to identify the source of funds.
  • Concerns have been raised that electoral bonds could be used to push illegal funds into the political system. 
  • There is also concern that the ruling party will receive the majority of the money.

Electoral Trust

  • An Electoral Trust is a corporation formed with the primary purpose of distributing contributions to political parties.
  • The Central Government's Electoral Trusts Scheme, 2013, defines the criteria and procedure for registering Electoral Trusts.

FAQ

Ans1. The electoral bonds were introduced in India under Finance Act, 2017.

Ans2. The Electoral Bonds Scheme was introduced in January 2018.

Ans3. Electoral Bonds can be purchased in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.

Ans4. State Bank of India is the Authorized Bank to sell Electoral Bonds.

Ans5. The electoral bonds can be purchased by Indian citizens or entities incorporated in India.

Ans6. The Electoral Bonds shall be valid for fifteen calendar days from the date of issue.
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