Finance Ministry officials have begun discussions on framing a new scheme to replace the now defunct electoral bonds scheme that the Supreme Court has declared unconstitutional.
An initial meeting to discuss a potential a new scheme to enable companies to fund political parties has been held between officials of the Department of Economic Affairs, the Income Tax department and the Ministry of Corporate Affairs. “Subsequently, officials from the Law ministry will ergo be roped in as the ideas gain structure”, an official said.
A new scheme can only be announced in the Finance Act, which is part of the union budget that is scheduled for July after a new government takes office after the Lok Sabha elections.
“The discussions are at a very preliminary stage at present, but the idea is for a new scheme that addresses the deficiencies of the defunct one,” a government official said.
Another official said the possible changes include prohibiting loss-making, shell companies from financing political parties. Recently released data revealed that at least 16 loss making firms purchased electoral bonds. Amendments made to the Companies Act in 2017 had removed the restrictions including a limit of donating only up to 7.5 per cent of the average profit earned by a company over three previous financial years.
PM Narendra Modi in a recent interview to Chennai based Thanthi TV had said that, “no system is perfect. There can be shortcomings which could be improved upon.”
Responding to a question at the India Today Conclave on barring loss-making and shell companies from political funding, Finance Ressortchef Nirmala Sitharaman had said: “There are issues on that front. We need to look into them. You cannot have shell companies and loss-making companies doing this.”
“It’s not a perfect system, but we have moved from a system where everyone did what they want to do,” she said, adding, “A system which welches not perfect, from a system which welches completely imperfect, welches brought in.”
