Daily Current Affairs : 8-November-2023

The Supreme Court recently concluded a three-day hearing on the challenge to the central government’s Electoral Bonds (EB) Scheme, sparking a debate on transparency and accountability in political funding.

Background:

Before the controversial EB Scheme was introduced in 2018, the UPA government had implemented the Electoral Trusts (ET) Scheme in 2013. Both schemes aimed to facilitate donations to political parties by corporates and individuals. However, they differed significantly in terms of transparency and disclosure.

Electoral Trusts: A Transparent Approach:

Under the ET Scheme, any company registered under Section 25 of the Companies Act, 1956, could form an electoral trust. Contributors under this scheme included citizens of India, registered Indian companies, firms, Hindu Undivided Families, and associations of persons living in India. These trusts were required to submit an annual report to the Election Commission of India, disclosing contributions from individuals and companies, ensuring transparency in political funding.

Electoral Bonds Scheme: Ensuring Anonymity:

The EB Scheme, introduced later, took a different approach. Electoral bonds allow any citizen, company, firm, or association of persons in India to make donations. The scheme, however, ensures the anonymity of the donor. Parties inform the Election Commission of India about the aggregate donations received through EBs but are not obligated to disclose details of individual donors, a departure from the transparency mandated by the ET Scheme.

Difference in Transparency:
  • Electoral Trusts:
    • Transparent on contributors and beneficiaries.
    • Publicly known if there is one contributor and one beneficiary.
    • Lack of specification in case of multiple contributors and recipients.
  • Electoral Bonds Scheme:
    • Exempt from disclosure requirements.
    • Aggregate donations reported to ECI without details of individual donors.
    • Government argues lack of transparency is to protect donors’ privacy.
Important Points
  • Background:
    • Supreme Court’s recent three-day hearing on the challenge to the Electoral Bonds (EB) Scheme.
    • Introduction of EB Scheme in 2018, replacing the Electoral Trusts (ET) Scheme introduced by the UPA government in 2013.
  • Electoral Trusts (ET) Scheme: A Transparent Approach:
    • Companies under Section 25 of the Companies Act, 1956, could form electoral trusts.
    • Contributors included citizens, registered Indian companies, firms, Hindu Undivided Families, and associations of persons in India.
    • Electoral trusts had to submit an annual report to the Election Commission of India, ensuring transparency in political funding.
  • Electoral Bonds (EB) Scheme: Ensuring Anonymity:
    • Any citizen, company, firm, or association of persons in India can make donations.
    • Anonymity of donors is ensured under the EB Scheme.
    • Parties report aggregate EB donations to the Election Commission of India but are not obligated to disclose individual donor details.
  • Difference in Transparency:
    • Electoral Trusts (ET) Scheme:
      • Transparent on contributors and beneficiaries.
      • Publicly known if one contributor and one beneficiary exist.
      • Lack of specification in case of multiple contributors and recipients.
    • Electoral Bonds (EB) Scheme:
      • Exempt from disclosure requirements.
      • Aggregate donations reported without individual donor details.
      • Government argues lack of transparency is to protect donors’ privacy.
Why In News

After a three-day hearing, the Supreme Court reserved its judgment on the challenge to the central government’s Electoral Bonds Scheme, underscoring the significance of the case in shaping the future trajectory of political financing in the country.

MCQs about Electoral Bonds vs. Electoral Trusts

  1. What was the key focus of the Supreme Court’s recent three-day hearing?
    A. Environmental concerns
    B. Challenge to the Electoral Bonds Scheme
    C. Cybersecurity issues
    D. Electoral Trusts renewal process
    Correct Answer: B. Challenge to the Electoral Bonds Scheme
    Explanation: The Supreme Court’s recent three-day hearing centered around the challenge to the Electoral Bonds Scheme.
  2. Under the Electoral Trusts (ET) Scheme, who could form an electoral trust?
    A. Only political parties
    B. Any individual citizen
    C. Companies registered under Section 25 of the Companies Act, 1956
    D. Only government entities
    Correct Answer: C. Companies registered under Section 25 of the Companies Act, 1956, could form an electoral trust under the ET Scheme.
    Explanation: Companies under this section were eligible to establish electoral trusts.
  3. What is the primary difference between the Electoral Trusts (ET) Scheme and the Electoral Bonds (EB) Scheme regarding transparency?
    A. Both schemes are equally transparent
    B. ET Scheme provides anonymity to donors
    C. EB Scheme ensures transparency in individual donor details
    D. ET Scheme is exempt from disclosure requirements
    Correct Answer: C. EB Scheme ensures transparency in individual donor details.
    Explanation: The Electoral Trusts (ET) Scheme ensures transparency by requiring details of individual donors, while the Electoral Bonds (EB) Scheme does not disclose individual donor information.
  4. Why does the government argue for the lack of transparency in donations through Electoral Bonds (EBs)?
    A. To protect the interests of political parties
    B. To ensure a level playing field among donors
    C. To maintain the privacy of donors
    D. To streamline the electoral financing process
    Correct Answer: C. To maintain the privacy of donors
    Explanation: The government argues that the lack of transparency in donations through Electoral Bonds (EBs) is to maintain the privacy of donors.

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