EC red-flags new poll funding norms to SC: ‘serious impact’

The EC also said that the changes in the Foreign Contribution (Regulation) Act, 2010 (FCRA) “would allow unchecked foreign funding of political parties in India, which could lead to Indian policies being influenced by foreign companies”.

The affidavit was filed by Vijay Kumar Pande, Director (Law), Election Commission of India, in response to petitions filed by the CPI(M) and the Association for Democratic Reforms, challenging the constitutional validity of the electoral bond scheme. Follow more election news here.

The Centre had earlier told the court that the decision to introduce electoral bonds was “a big step towards electoral reform” and the process to acquire/ encash them would “ensure transparency” and “accountability”.

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The EC, however, said the move would take donations received by a political party out of the ambit of reporting them as per provisions of the Representation of the People Act, 1951. It said it had conveyed in its letter that “in a situation where contributions received through electoral bonds are not reported, on perusal of the contribution reports of the political parties, it cannot be ascertained whether the political party has taken any donation in violation of provisions under Section 29B of the Representation of the People Act 1971, which prohibits political parties from taking donations from government companies and foreign sources”.

On the changes in the FCRA, through the Finance Act, 2016, the EC said it “allows donations to be received from foreign companies having majority stake in Indian companies, provided that they follow the FEMA guidelines pertaining to foreign investment in the sector in which they operate… This is a change from the existing law barring donations from all foreign sources as defined under the Foreign Contribution (Regulation) Act.”

The EC also said that in March 2017, it “had written to the Ministry of Law and Justice that many political parties had been reporting a major part of the donations received as being less than the prescribed limit of Rs 20,000, for which details regarding name, address and PAN of the donors were not being maintained.”

Accordingly, it recommended some changes in law to ensure transparency in political funding and to reduce the limit of anonymous cash donations to Rs 2,000.

The EC said it had, in 2004 and 2016, sent proposals to the government to bring about changes in laws to ensure transparency in the collection and spending of funds by political parties.