EC raises concern over electoral bonds

Bloomberg New Delhi | Updated on March 28, 2019 Published on March 28, 2019

India’s new campaign finance rules allowing anonymous donations have reduced transparency in political funding, the Election Commission of India said, according to people familiar with a filing in the country’s top court.

The EC — one of the respondents in a case filed against the new funding rules — said anonymous donations will have serious repercussions and impact on the transparency of political funding, the people said, asking not to be identified as the affidavit is not public.

The court is hearing petitions challenging the introduction of electoral bonds and seeking a ban on cash donations filed by Association for Democratic Reforms, a non-government organisation.

The commissions statement, seen by Bloomberg, comes weeks ahead of general elections in which Prime Minister Narendra Modi is seeking a second term. Modi came to power in 2014 promising a crackdown on corruption.

The Election Commission’s comments and any adverse ruling from the top court may dent the anti-graft credentials of the ruling Bharatiya Janata Party.

Election Commissions spokeswoman Sheyphali Sharan did not answer two calls made to her mobile phone.

Electoral bonds

The changes in law allow anonymous donations through electoral bonds which can be bought at a bank in denominations ranging from 1,000 rupees to Rs 1 crore and given to a political party, which can exchange them for cash. They do not carry the name of the donor and are exempt from tax.

The government has claimed that the changes will cleanse political funding. The move was criticised for allegedly legalising large anonymous donations that can potentially lead to businesses and foreign companies gaining influence over the elections that start on April 11.

The Election Commission said the rule allowing political parties to receive donations from foreign companies having majority stake in an Indian company would allow unchecked foreign funding of political parties in India, which could lead to Indian policies being influenced by foreign companies.

The Supreme Court is scheduled to hear the case on April 2.

Published on March 28, 2019

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