advertisement
In addition to the Reserve Bank of India (RBI) and the Election Commission of India, the Ministry of Law and Justice (MoLJ) had also strongly objected to the issuance of electoral bonds on three grounds, reveals a chain of correspondence with the finance ministry.
First, the finance ministry had issued a notification on 2 January 2018, stating that electoral bonds are promissory notes:
The MoLJ objected saying that electoral bonds shouldn’t be sold in the form of a ‘promissory note’ on two grounds: One, an electoral bond doesn’t qualify as a promissory note, and second, it can be used as currency.
Electoral bonds can exchange several hands before they reach their intended target, a political party, as they don’t carry the name of the donor or the receiver.
Second, the finance ministry had proposed that, “Only political parties which obtained no less than 1 percent share of the electoral votes cast in the last Lok Sabha election or any Vidhan Sabha election” would be eligible to receive electoral bonds.
The law ministry further said that this proposal will not be in sync with Section 29B of The Representation of The People Act, 1951.
Following this, the government, instead of removing the proposal, amended Section 29B of The Representation of The People Act, restricting the benefits of electoral bonds only to a few political parties.
Third, the law ministry also objected to reimbursement of electoral bonds’ expenses by the central government to the SBI. RTI documents reveal that till May 2019, the central government had paid Rs 3.24 crore as commission on the sale of electoral bonds to the public sector bank.
Experts argue that taxpayers shouldn’t bear the administrative expenses of electoral bonds, rather it should be recovered from the purchaser of the bond.
A file noting dated 8 December 2017 reveals that Subhash Chandra Garg, the then secretary of Department of Economic Affairs (DEA), accepted MoLJ’s argument saying that, “Purchasing party (of electoral bonds) can indeed transfer it to another party/parties before the bond is handed over to the political party".
Accordingly, a meeting was held on 19 December 2017 between the joint secretary of MoLJ and SBI’s law officers, under the chairmanship of Garg, to resolve the objections raised by the law ministry.
They also said that MoLJ had ‘no problem in including 1 percent vote share political parties’ and the net cost of electoral bonds will be ‘borne by the central government’. But the minutes do not explain the evidence or grounds on which MoLJ reversed its objections.
The MoLJ pointed out that, “Electoral bond does not qualify to be a promissory note as it is to be endorsed to a specified entity, ie, to a political party only”.
On MoLJ’s objection, the DEA mentioned that SBI is still insisting on using ‘promissory note’ to avoid stamp duty implications. A stamp duty would have required the purchaser to shell out extra money.
In an email to DEA Joint Secretary Prashant Goyal, General Manager Rupee and Global Markets of SBI G Ravindranath said that if electoral bonds are not sold as promissory notes and just as ‘banking instruments’, “the chances of the state government officials to levy stamp duty” cannot be ruled out.
To make the electoral bonds scheme attractive, by not allowing any stamp duty on it, the government overruled the law ministry’s objections.
Every institution involved in the electoral bonds scheme, from RBI to EC to the MoLJ, raised objections to the manner in which the government proposed to introduce the scheme.
Now, all hopes are pinned on the Supreme Court, which is hearing the petition challenging the electoral bonds scheme. The next hearing is expected in January 2020. The matter was last heard in April 2019.
Click here to access RTI documents on electoral bonds.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)
Published: 05 Dec 2019,01:16 PM IST