SC to hear petition challenging electoral bonds

Context

The Supreme Court said that it will hear petitions challenging the electoral bonds scheme on October 31.

About

Points made in the petition

The Association for Democratic Reforms, which monitors the criminal antecedents of the candidates of various parties, has alleged that the ruling party had received more than 60% of total electoral bonds in the audit of the parties in two years of 2017-18 and 2018-19.
The NGO has noted that even the Election Commission and the Reserve Bank of India had in 2017 objected to the electoral bonds, advising against their issuance as a mode of donation to the political parties.
Simply put, the scheme is said to be“an obscure funding system which is unchecked by any authority”.
The government has all through defended the electoral bond scheme, describing it as completely transparent, that takes care of unaccounted funding of the political parties.

What is Electoral Bond?

Electoral bonds were introduced through Finance Act 2017, which amended three other statutes - the RBI Act, the Income Tax Act and the Representation of People Act for enabling introduction of such bonds.

The government of India notified the Electoral Bonds Scheme in January 2018.
Purpose:The bonds are issued specifically for the purpose of funding political parties.
Issuer:Under this scheme, bonds for contributions to political parties can be issued by theState Bank of India and can be bought by any donor with a Know Your Customer (KYC) compliant account.
Who can purchase?Electoral bonds may be purchased by a person, who is a citizen of India or a body incorporated or established in India.
Nature:It is issued in the nature of a promissory note which shall be a bearer banking instrument. It shall not carry the name of the buyer.
Denomination:The bonds shall be issued in the denomination of Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 1,00,00,000.

Why they attract Criticism?

Contradicting its Basic Idea: The scheme does the exact opposite of what it was meant to do i.e. to bring transparency to election funding.
Possibility of Extortion: The fact that such bonds are sold via a government-owned bank (SBI) leaves the door open for the government to know exactly who is funding its opponents.
A Blow to Democracy: Political parties are exempted from disclosing donations received through electoral bonds.
Against Free & Fair Elections: Electoral bonds provide no details to the citizens.