Electoral Bonds: Political Funding Crosses ₹600 Crore Amidst SC Scrutiny

Answer: D

All four statements are correct regarding Electoral Bonds. 1. Any citizen of India or a body incorporated in India can purchase electoral bonds. 2. The denominations are indeed ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore. 3. The eligibility criteria for political parties to receive bonds are as stated: registered under Section 29A of RPA, 1951, and having secured at least 1% of votes in the last general or assembly election. 4. Electoral bonds are valid for fifteen calendar days from the date of issue.

Answer: C

The core criticism against the Electoral Bond scheme is that it ensures donor anonymity, meaning the public does not know who is funding political parties. This lack of transparency is argued to undermine the 'right to know' of citizens, which is an integral part of Article 19(1)(a) (freedom of speech and expression). A) The scheme ensures donor anonymity, it does not mandate disclosure to the ECI. B) While there were concerns about amendments to the Companies Act allowing foreign companies, the primary criticism is about anonymity, not necessarily foreign funding itself being the 'key criticism' in this context. D) The scheme does not limit the amount of donations; rather, it facilitates large, anonymous donations.

Answer: B

Let's analyze each statement: 1. The Finance Act, 2017, introduced amendments to the *Reserve Bank of India Act, 1934*, and the *Representation of the People Act, 1951*, and the *Income Tax Act, 1961*, and the *Companies Act, 2013* to facilitate the Electoral Bond scheme. So, the RBI Act amendment is correct in this context. However, the question asks about the *legal framework* surrounding political funding in general, and the key amendments for Electoral Bonds were to the RPA, Income Tax Act, and Companies Act. The RBI Act was amended to allow the central government to authorize any scheduled bank to issue electoral bonds. So, statement 1 is technically correct in terms of the act amended, but the primary acts for the scheme's operation are RPA and Companies Act. 2. The Finance Act, 2017, indeed amended Section 29C of the Representation of the People Act, 1951, to exempt political parties from disclosing donations received through Electoral Bonds to the Election Commission of India. This is a correct statement. 3. The Finance Act, 2017, amended Section 182 of the Companies Act, 2013, to remove the earlier cap of 7.5% of average net profits of the preceding three financial years on corporate donations to political parties. This is also a correct statement. Given the options, statement 2 and 3 are unequivocally correct and represent significant changes brought by the Finance Act, 2017, related to political funding. Statement 1 is also correct in that the RBI Act was amended, but the core changes for the scheme's operation and controversy lie in RPA and Companies Act. However, if we consider the *legal framework* that *facilitated* the scheme, the RBI Act amendment was crucial for allowing a scheduled bank (SBI) to issue them. Re-evaluating, the question asks 'which of the statements given above is/are correct?'. All three statements describe correct amendments related to the legal framework of political funding and Electoral Bonds. However, UPSC often looks for the most direct and impactful changes. The amendment to the RBI Act was to enable the issuance, while RPA and Companies Act amendments directly impacted transparency and corporate funding limits. Let's re-check the most common understanding. The RBI Act amendment was indeed part of the legal changes. So, all three are correct. But if there's a nuance, it's often in the 'facilitate' part. The RBI Act amendment allowed the 'issuance' of bearer bonds. The RPA amendment allowed 'non-disclosure' and Companies Act allowed 'unlimited corporate funding'. All are part of the 'legal framework'. Let's consider the possibility of a subtle distractor. The RBI Act amendment was to allow the central government to authorize any scheduled bank to issue electoral bonds. This is a direct facilitation. So, 1, 2, and 3 are correct. However, in UPSC, sometimes they test the *most prominent* changes. The removal of the 7.5% cap and the non-disclosure are the most controversial. If we have to pick the 'most correct' or 'direct' ones, 2 and 3 are definitely direct consequences of the Finance Act 2017 for political funding transparency. Let's assume all three are correct as they are factual amendments. Upon re-verification, the RBI Act, 1934, was indeed amended by the Finance Act, 2017, to insert Section 31(3) which allowed the central government to authorize any scheduled bank to issue electoral bonds. Therefore, statement 1 is correct. Statement 2 is correct as Section 29C of RPA was amended. Statement 3 is correct as Section 182 of Companies Act was amended. Hence, D is the correct answer.

Answer: A

Assertion (A) is true: The Supreme Court indeed reserved its verdict on the constitutional validity of the Electoral Bond scheme in November 2023. Reason (R) is also true: The primary argument of critics and petitioners challenging the scheme is that donor anonymity undermines the citizens' right to know about political funding, which is considered part of the fundamental right to freedom of speech and expression (Article 19(1)(a)). Furthermore, R is the correct explanation of A because the Supreme Court's scrutiny and reservation of verdict are precisely due to these constitutional challenges based on transparency and the right to information.