FM underscores the need to learn lessons from electoral bonds scheme

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Finance Minister highlights that loss-making or shell companies should not participate in such donations

Finance Minister Nirmala Sitharaman on Friday stressed the importance of learning from the electoral bonds scheme to enhance transparency in the system. Speaking at the India Today Conclave 2024, Sitharaman remarked that the electoral bonds introduced a system that, although not perfect, improved upon a completely flawed system.

“Our effort should be to learn from this. I am not suggesting whether a new law will be introduced, but we must incorporate lessons from this experience to progressively enhance transparency,” Sitharaman stated.

She also highlighted that loss-making or shell companies should not participate in such donations, noting this as an issue that requires attention. “Corporates can contribute, but the terms and applicable laws need to be clearly defined,” the Finance Minister added.

The amendment to Section 182 of the Companies Act through the Finance Act in 2017 removed the cap on the amount a company could donate and also abolished the requirement to disclose the political party receiving the donation. Before this amendment, the Companies Act limited a company’s donations to 7.5 per cent of its average net profits over the past three financial years.

The Supreme Court, in its ruling on electoral bonds, declared that the 2017 amendment to Section 182 of the Companies Act was unconstitutional.

Addressing the scrutiny faced by companies purchasing electoral bonds, Sitharaman clarified that donations made by companies under investigation should not be automatically deemed suspicious. “It’s possible they donated prior to coming under investigation,” she said.

Sitharaman also called for enhanced coordination between the central government, state governments, urban, and panchayat bodies to advance the reform agenda. “Reforms need to be implemented at every level,” she further commented.

Regarding India’s stance on cryptocurrency, the Finance Minister stated that cryptocurrencies cannot be treated as currencies in India and remain unregulated. “Regulating cryptocurrencies in one country while others do not could lead to issues like money laundering or funding illicit activities. Therefore, we are working towards establishing a framework at the G20 level. The proposal has been well-received, and I anticipate a framework will emerge,” she explained.

On the trend of declining household savings, Sitharaman observed that more people are investing directly in the stock market. She also noted the stability of the Indian stock market, advocating for it to operate independently.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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