Electoral bonds: As SC calls them unconstitutional, here's how Arun Jaitley defended the scheme

The Supreme Court on 15 February struck down the validity of the electoral bond scheme. The top court termed the “unconstitutional” and called it violative of Article 19(1)(a).

However, in 2019, the then Finance Minister Arun Jaitley had defended the scheme. According to him, it aimed at checking the use of black money for funding elections. He had proposed the scheme while presenting the Union Budget for the 2017-18 fiscal year. He said the scheme was "an effort to cleanse the system of funding of political parties”.

Later in 2018, he also shared a statement on Facebook while defending the scheme. “India is the largest democracy in the world. However, despite strengthening various institutions for the last seven decades, India has not been able to evolve a transparent political funding system. Elections and political parties are a fundamental feature of Parliamentary democracy. Elections cost money. Round the year functioning of the political parties involves a large expenditure. Parties run offices throughout the country. Staff salaries, travelling expenses, establishment cost are regular expenditures of political parties. There has not been a single year where elections either for the Parliament or State Assemblies have not been held. Besides the expenditure of individual candidates, political parties have to spend money on election campaigns, publicity, tours, travels and election related establishments. These expenditures run into hundreds of crores. Yet there has not been a transparent funding mechanism of the political system,” he said.

According to him, political parties have hundreds of crores of expenditure right from staff salaries, travelling expenses, establishment costs, election campaigns and publicity among other things. However, there was no transparent funding mechanism of the political system.

“A major step was taken during the first NDA Government led by Shri Atal Bihari Vajpayee. The Income Tax Act was amended to include a provision that donations made to political parties would be treated as expenditure and would thus give a tax advantage to the donor. If the political party disclosed its donations in a prescribed manner, it would also not be liable to pay any tax. A political party was expected to file its returns both with the income-tax authorities and Election Commission. It was hoped that donors would increasingly start donating money by cheque. Some donors did start following this practice but most of them were reluctant to disclose the details of the quantum of donation given to a political party," the former finance Minister had written.

He had reinstated that donations made online or through cheques remain an ideal method of donating to political parties. But, according to him, these were not popular in India since they involved disclosure of the donor's identity.