Date : 30/11/2023

Relevance: GS Paper 2 – Polity and Governance

Keywords: Representation of the People Act 1951, Financial Accountability, Electoral Bonds, Electoral Justice

Context-

The recent hearings in the Supreme Court regarding the challenge to electoral bonds in India bring to the forefront the critical role of political parties in the democratic process. As the entities responsible for forming and overseeing the government, political parties require adequate funding to function effectively while maintaining public confidence. However, the amendments to the Representation of the People Act 1951, introducing electoral bonds with complete anonymity for political donors, stand in stark contrast to global norms that emphasize the necessity of full disclosure in political contributions.

Global Perspectives on Political Funding:

The United States, a pioneer in political funding regulations, enacted the Publicity Act in 1910. This landmark legislation not only mandated the disclosure of all funding to political parties and candidates but also imposed limits on political contributions. The U.S. Supreme Court's decision in Buckley v. Valeo (1976) reinforced the constitutionality of public disclosure requirements, emphasizing that large contributions with potential quid pro quo implications undermine the integrity of representative democracy. The court recognized the importance of avoiding not only actual corruption but also the appearance of corruption, acknowledging the potential erosion of public confidence in the political system.

In 2014, the European Union took a significant step by enacting a regulation on the funding of European political parties and foundations. This regulation established limits on the value of donations, with a requirement for disclosure and immediate reporting for donations exceeding specified thresholds. The United Kingdom, through the Political Parties, Elections and Referendums Act 2000, imposed restrictions on political party donations and loans, coupled with stringent requirements for declaring the source of donations.

Common Global Requirements:

Across various jurisdictions, two consistent requirements emerge in political funding regulations — complete disclosure of donors above certain minimal amounts and limits or caps on donations. These measures aim to ensure transparency, accountability, and the prevention of undue influence on the democratic process. The need for such regulations is rooted in the belief that political parties are the pillars of representative democracy, and transparent financial practices are essential to uphold citizens' trust in the political system.

Importance of Disclosure:

Transparent accounts are fundamental to preserving citizens' trust in political parties and politicians, maintaining the rule of law, and eliminating corruption in the electoral and political processes. Disclosure of funding sources becomes imperative as it upholds the democratic principle of separating wealth from power, preventing the undue influence of financial resources on electoral outcomes. In democracies, the integrity of elections should not be compromised by a reliance on financial prowess, ensuring that the electoral playing field remains level for all parties.

The Road Ahead for Indian Democracy:

To safeguard the principles of democracy and electoral justice, it is crucial to reassess the implications of electoral bonds in India. The current practice of keeping donor details undisclosed through electoral bonds raises concerns about transparency and the potential erosion of free and fair elections. A mere declaration of the unconstitutionality of electoral bonds may not be sufficient; instead, there is a pressing need for comprehensive legislation to regulate political party funding.

Components of Comprehensive Legislation:

Public Disclosure:

• Mandate full publication of all donations made to political parties, candidates, or political foundations above a certain nominal limit.
• Immediate reporting of large donations to the election commission to ensure real-time transparency.

Financial Accountability:

• Require political parties to make their accounts public and submit financial statements to the election commission.
• Facilitate auditing of political party accounts by an independent authority to ensure financial integrity.

Limits on Funding and Expenditure:

• Set clear limits on funding and expenditure by political parties to prevent unchecked financial influence.
• Establish mechanisms for enforcing these limits, ensuring adherence to the rule of law.

Independent Oversight:

• Introduce an independent oversight body responsible for monitoring and enforcing political funding regulations.
• Uphold the democratic principle of electoral justice by ensuring adherence to legal procedures and decisions.

Conclusion:

The outcome of the challenge to electoral bonds in India holds immense significance for the country's democracy and the rule of law. To fortify democratic processes, it is imperative to move beyond a mere declaration of unconstitutionality and focus on enacting comprehensive legislation. Drawing inspiration from global models, India should embrace a framework that prioritizes public disclosure, financial accountability, limits on funding, and independent oversight. A robust legal framework will not only preserve the integrity of the democratic system but also foster public trust, ensuring that the democratic ideals of free, fair, and genuine elections are upheld. The journey towards a healthy democracy in India requires a legislative commitment to transparent political funding, thereby safeguarding the core principles of representative governance.

Source- The Hindu