Post-Electoral Bond Ban: Political Parties See Triple Funding from Trusts
After SC scrapped electoral bonds, political parties' funding from trusts surged threefold.
Photo by Markus Winkler
The Supreme Court's decision to scrap the electoral bond scheme has led to a significant shift in political funding. In the 2024-25 financial year, political parties received nearly three times the funding from electoral trusts compared to the previous year. This unexpected surge, from ₹250.60 crore in 2023-24 to ₹707.07 crore in 2024-25, highlights a critical gap in transparency.
While electoral bonds were criticized for opacity, the shift to trusts, though seemingly more transparent, still raises questions about the ultimate source of funds and corporate influence in elections. This development is crucial for understanding the evolving landscape of political finance in India, a topic frequently tested in UPSC exams.
मुख्य तथ्य
Electoral trusts' funding to political parties tripled in 2024-25 compared to 2023-24
Total funding from trusts in 2024-25: ₹707.07 crore
Total funding from trusts in 2023-24: ₹250.60 crore
BJP received highest share: ₹501.07 crore (2024-25)
Congress received ₹77.34 crore (2024-25)
SC junked electoral bonds in February 2024
UPSC परीक्षा के दृष्टिकोण
Constitutional validity of electoral finance mechanisms
Role of the Supreme Court in electoral reforms
Transparency and accountability in political funding
Impact of corporate funding on democratic processes
Regulatory framework for political parties and donations (RPA, Companies Act, Income Tax Act)
Functioning and oversight of Electoral Trusts
दृश्य सामग्री
Key Milestones in India's Political Funding Reforms: From Trusts to Bond Ban
This timeline traces the significant legislative and judicial developments concerning political funding mechanisms in India, highlighting the introduction of Electoral Trusts, Electoral Bonds, and the Supreme Court's landmark decision, culminating in the recent surge in trust funding.
Political funding in India has historically faced challenges of opacity. The introduction of Electoral Trusts and later Electoral Bonds were attempts at reform, albeit with varying degrees of transparency. The Supreme Court's intervention in 2024 marked a pivotal moment, reshaping the landscape of political finance and leading to a renewed focus on existing mechanisms like Electoral Trusts.
- 2013Electoral Trust Scheme introduced by CBDT to regulate corporate donations.
- 2017Finance Act 2017 introduces Electoral Bond Scheme, amending RP Act, Companies Act, etc.
- 2018Electoral Bond Scheme operationalized, allowing anonymous donations.
- Feb 15, 2024Supreme Court unanimously strikes down Electoral Bond Scheme as unconstitutional, violating Article 19(1)(a).
- 2024-25Electoral Trusts see nearly triple funding (₹707.07 Cr) post-Electoral Bond ban, becoming a primary channel.
और जानकारी
पृष्ठभूमि
Political funding in India has long been a contentious issue, marked by concerns over transparency, black money, and corporate influence. Historically, cash donations were prevalent, leading to opacity.
Various attempts at reform, including limits on corporate donations and mandatory disclosure for donations above a certain threshold, have been made. The Electoral Bond Scheme, introduced in 2018, was touted as a step towards transparency by enabling donations through banking channels, but it faced severe criticism for anonymizing donors to political parties, thus hindering the public's right to know the source of funding.
नवीनतम घटनाक्रम
The Supreme Court, in a landmark judgment in February 2024, struck down the Electoral Bond Scheme as unconstitutional, citing violations of the right to information and free and fair elections. Following this ban, there has been a significant shift in political funding patterns. The news highlights that political parties received nearly three times the funding from Electoral Trusts in the 2024-25 financial year compared to the previous year (₹707.07 crore vs.
₹250.60 crore). This surge indicates that trusts are emerging as a primary channel for corporate and individual donations, raising new questions about the ultimate source of funds and the potential for continued corporate influence, despite trusts being considered more transparent than electoral bonds.
बहुविकल्पीय प्रश्न (MCQ)
1. Consider the following statements regarding Electoral Bonds and Electoral Trusts in India: 1. Electoral Bonds allowed for anonymous donations to political parties, whereas Electoral Trusts are mandated to disclose donor details to the Election Commission of India. 2. Both Electoral Bonds and Electoral Trusts were introduced primarily to channel corporate donations to political parties through banking systems. 3. The Supreme Court of India recently declared the Electoral Bond Scheme unconstitutional, but Electoral Trusts continue to operate under existing regulations. Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: D
Statement 1 is correct: Electoral Bonds were criticized for anonymity, while Electoral Trusts (regulated by the CBDT) must disclose donor details (name, PAN, amount) to the ECI, which then makes it public. Statement 2 is correct: Both mechanisms were indeed introduced to bring transparency by ensuring donations go through banking channels, primarily targeting corporate and individual donations. Statement 3 is correct: The Supreme Court struck down the Electoral Bond Scheme in February 2024, while Electoral Trusts, governed by the Income Tax Act and ECI guidelines, remain a legal channel for political funding.
2. In the context of political funding in India, which of the following statements is NOT correct?
उत्तर देखें
सही उत्तर: B
Statement A is correct: Section 29C of the RPA, 1951, mandates disclosure of contributions. Statement C is correct: Electoral Trusts are indeed regulated by CBDT and must distribute 95% of their contributions. Statement D is correct: FCRA, 2010, governs foreign contributions. Statement B is NOT correct: The Companies Act, 2013, initially had a cap of 7.5% of average net profits for corporate donations. However, this cap was removed by the Finance Act, 2017, effectively allowing companies to donate any amount without limit. This change was a key feature of the electoral bond scheme and remains relevant for other forms of corporate donations.
3. Consider the following statements regarding the Supreme Court's judgment on the Electoral Bond Scheme: 1. The Court held that the scheme violated the fundamental right to information under Article 19(1)(a) of the Constitution. 2. The judgment mandated the Election Commission of India to publish details of all electoral bonds purchased and redeemed since the scheme's inception. 3. The Court explicitly stated that the scheme was unconstitutional because it allowed for the use of black money in elections. Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: C
Statement 1 is correct: The Supreme Court explicitly ruled that the anonymity provided by electoral bonds violated the voters' right to information about political funding, which is an integral part of Article 19(1)(a). Statement 2 is correct: The Court directed the State Bank of India (SBI) to submit details of all electoral bonds purchased and redeemed since April 12, 2019, to the ECI, which was then mandated to publish this information on its website. Statement 3 is NOT correct: While the scheme was criticized for potentially facilitating black money, the Court's primary reasoning for striking it down was the violation of the right to information and the principle of free and fair elections, not explicitly the use of black money. The judgment focused on the opacity and its impact on democratic processes.
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