NEW FINDINGS RELATED TO ELECTORAL BONDS

NEW FINDINGS RELATED TO ELECTORAL BONDS

GS PAPER 2

THE HINDU EDITORIAL

Background on Electoral Bonds Scheme

•  State Bank of India (SBI) and Supreme Court: SBI was compelled by the Supreme Court of India to release information on donations via electoral bonds to political parties.

Questionable Donations:

• At least 33 companies with aggregate losses of over ₹1 lakh crore from 2016-17 to 2022-23 donated close to ₹582 crore, with 75% going to the ruling BJP.
• Some companies made donations exceeding their aggregate profits.
• Some firms did not report data on net profits or direct taxes.
• Newly incorporated firms were making donations before the required three-year period after being formed.

Potential Misuse of the Scheme:

• Loss-making firms may have been fronts for money laundering.
• Firms that did not report profits could be shell companies.
• Donor firms with significant profits but no net direct taxes over long periods may have engaged in tax evasion.
• Firms under investigation by the Enforcement Directorate and I-T Department were major donors to the ruling party, suggesting potential quid pro quo.

Warnings by Authorities:

• The Reserve Bank of India (RBI) and Election Commission of India officials expressed concerns that the bonds scheme could facilitate money laundering and tax evasion.
• Support by Union Finance Ministry: Despite these concerns, the Union Finance Ministry went ahead with the scheme.

Impact on Political Parties:

• In the five and a half years since its inception, thousands of crores were enchased by political parties via electoral bonds.

Transparency and Accountability:

• The Supreme Court has ended the opaque scheme, which had serious issues with transparency.
• The large amounts donated from questionable sources before each election highlight problems with the current campaign financing system.

Call for Thorough Investigation:

• Once the election is over, a thorough investigation must be conducted into the nature of donations to ensure laws were not broken.
• The judiciary should push regulatory institutions and Parliament to investigate and clean up campaign and electoral financing for a healthy democracy.