Donations via Electoral Bonds anonymous to protect privacy, political affiliation of donors: SG Tushar Mehta to Supreme Court

Solicitor General of India (SG) Tushar Mehta told the Supreme Court that donations made through electoral bonds are kept anonymous to protect the privacy and political affiliation of the citizens who make such donations to political parties..In his written submissions filed before the top court in the case challenging the legal validity of electoral bonds, SG Mehta emphasized that the scheme aims to strike a balance between the necessity for transparency and the need to safeguard the confidentiality of donors..Mehta stated that donors often resort to using unaccounted cash for political contributions due to their apprehension of potential victimization or retribution from other political parties. He underscored that previous government initiatives aimed at addressing the use of unaccounted cash for political donations, such as tax exemptions and electoral trusts, had proven unsuccessful because donors were insistent on maintaining their confidentiality."The electoral bond do not carry the name of the buyer or payee in order to protect the citizen’s right to privacy to its own political affiliation and to choose to fund a political party of its own choice, without the fear of being targeted or suffering vindicative repercussion for owning such a choice. It is in furtherance of the State’s positive obligation to safeguard the privacy of its citizens, which necessarily includes, the citizens’ right to informational privacy, including the right to secure the political affiliation of its citizens," he submitted..The current scheme is a response to donor resistance and is specifically designed to incentivize the use of clean money for contributions while safeguarding the identities of the donors.Mehta suggested that eliminating the confidentiality aspect of the scheme would render it ineffective and could potentially lead to a resurgence of cash-based political contributions."The present scheme is the result of tackling this resistance of donors and to incentivize them to use clean money through official banking channel while maintaining the confidentiality of their names. If this confidentiality, which is the heart and soul of the scheme and necessary to achieve the object of utilizing clean money for political donations, is removed, the scheme will become redundant and the country would go back to the era where donations to political parties were substantially made in cash," he submitted.Accordingly, he stated that all arguments of the petitioners regarding right to know and necessity of transparency need to be examined from the above perspective. "A question would arise as to how the citizens would gain by going back to the earlier regime on the ground that the present scheme, though absolutely transparent and operating through official channel, is declared to be bad merely on the ground that the donor and donee remains confidential," he added.Mehta also highlighted that donors and political parties have specific disclosure requirements to ensure transparency and accountability, particularly in the event of legal investigations..Furthermore, Mehta contended that the petitioners were misconceived in their understanding of the policy when they alleged that it seeks to create an anonymous and secretive mechanism for increasing the wealth of political parties.He stressed that the elements of anonymity and the privacy of information are crucial to encourage and popularize the scheme, with the ultimate goal of transitioning from a cash-based economy to a regulated, legal one.Mehta argued that the amendments are not arbitrary as they impose only reasonable and narrowly-tailored restrictions on the freedom of information pertaining to the identities of individuals or corporations contributing to political parties.Therefore, he maintained that these restrictions and incentives have a rational connection to the objective being pursued. In fact, without these incentives, the desired goal may not be attainable, as political donations could persist outside the bounds of regulation, he stated..An electoral bond is an instrument in the nature of a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India.The bonds, which are in multiple denominations, are issued specifically for the purpose of contributing funds to political parties in its existing scheme.Electoral bonds were introduced through the Finance Act, 2017, which in turn amended three other statutes - the RBI Act, the Income Tax Act and the Representation of People Act - to enable the introduction of such bonds.The 2017 Finance Act introduced a system by which electoral bonds could be issued by any scheduled bank for the purpose of electoral funding.The Finance Act was passed as a money bill, which meant that it did not require the assent of the Rajya Sabha.Various petitions are pending before the top court challenging at least five amendments made to different statutes through the Finance Act, 2017 on the ground that they have opened doors to unlimited, unchecked funding of political parties.The petitions have also raised the ground that the Finance Act could not have been passed as a money bill.The Central government in its counter-affidavit has maintained that the electoral bonds scheme is transparent.The top court had in March 2021 dismissed an application seeking a stay on the scheme.