Supreme Court Suggests Alternative System for Political Donations Amid Electoral Bond Challenges

In a recent hearing of a batch of petitions challenging the validity of electoral bonds, the Supreme Court proposed the development of an alternative system to address the flaws in the existing electoral bonds system. The case, titled Association for Democratic Reforms and Anr vs Union of India Cabinet Secretary and ors, was heard by a bench comprising Chief Justice of India (CJI) DY Chandrachud along with Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra.

CJI Chandrachud emphasized that while the Court did not advocate reverting to a cash-only system, it was essential to rectify the significant deficiencies in the current electoral bond system. He stated, “We do not want to go back to a cash-only system. We are saying do it in a proportionate, tailor-made system which overcomes the serious deficiencies of this electoral bond system.”

However, the Constitution Bench stressed that the task of designing a new system should be undertaken by the legislature or the executive, and the Court would not intervene in that domain. They asserted, “You can design another system which does not have the flaws of this system… they put a premium on opacity. You can still devise a system which balances out in a proportional way. How it is to be done is for you to decide. We will not step into that arena; that is not part of our function.”

During the hearing, the Court addressed Solicitor General of India Tushar Mehta and outlined five considerations that could be taken into account:

  1. Reducing the cash element in the election process.
  2. Encouraging the use of authorized banking channels.
  3. Incentivizing the use of banking channels.
  4. Ensuring transparency.
  5. Preventing the legitimization of kickbacks and quid pro quo.

The Court reiterated that the responsibility to strike a balance in these considerations lies with the legislature or the executive. CJI Chandrachud also highlighted the historical cap on donations by companies, which was based on a percentage of their net profit. He pointed out that the current system allows even companies with zero turnover to make donations, raising concerns about transparency and misuse.

The ongoing hearing includes arguments presented by the Attorney General for India, R Venkataramani, before the Constitution Bench. The Supreme Court’s suggestions reflect its concern for ensuring transparency and addressing flaws in the political donation system while acknowledging the role of the legislature and the executive in making necessary reforms.

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