Table of Contents
What is electoral bond?
Electoral bonds scheme are financial instruments used to make donations to registered political parties in India. It was introduced in 2018 by then Finance Minister Late Mr. Arun Jaitely, as part of efforts to reform the political funding ecosystem in India and to increase the transparency in political donations. a citizen of India or a body incorporated in India is eligible to purchase the bond
Features of electoral bond scheme
The purchaser has the right to buy the electoral bond(s) if he/she/it comply with all present KYC norms and also by making payment from a back account. It will not carry the name of the payee.
Electoral bonds are valid only for 15 days during which it can be used for making donations only to the political parties registered under section 29A of the Representation of Peoples Act of 1951(43 of 1951) and the political party should must have secured more than 1% of vote in last Lok Sabha election or in last State election.
The electoral bonds are available for purchase for a period of 10 days in each months of January, April, July and October. An additional period of 30 days is also specified by the central government in the year of Lok Sabha election. The bond can be converted to cash by an eligible political party only through a specified bank account with the authorised bank, i.e, State Bank of India. Interestingly, only SBI has all the access of the details related to the bond transaction, i.e, who purchased the bond and who encashed it.
Also according to the scheme, any bonds that are not encashed within 15 days of being issued will have their proceeds deposited into the Prime Minister Relief Fund
How electoral bonds help political parties to raise funds?
According to the press release of Ministry of Finance, electoral bonds are issued for any value, in multiples of ₹1000, ₹10,000, ₹1,00,000, ₹10,00,000 and ₹1,00,00,000 from the specified branch of the State Bank of India (SBI).Â
Suppose a person/entity purchases an electoral bond of ₹1 lakh from the specified branch and hand over the purchased bond to the political party he/she/it wants to fund. To convert this bond into cash, the political party needs to visit the bank within 15 days only then after it can encash the bond as electoral bonds are valid for only 15 days. The donations under this scheme by corporate and even foreign entities enjoys 100% tax exemptions and also the identities of the donors are kept confidential both by the bank and recipient political parties.
Controversies around electoral bonds
Electoral bonds were introduced to bring transparency in political funding. Despite this intent, it is facing a lot of criticism and controversies. Some of them are:-
- Violation of Right to Information: There have been claims that the electoral bond scheme violates the citizens’ fundamental right to information about political parties under Article 19(1)a.
- Lack of transparency: The electoral bond scheme ensures the anonymity of the donor to the political parties which raises concerns about the lack of transparency in political funding.Â
- Threat of Money Laundering: There are concerns that electoral bonds might be used to transfer black money into the political system and launder illegal funds. The legitimacy of political donations are into doubt because it is challenging to trace back the source of funding due to the anonymity of donors.
- Unequal level playing field for opposition: ” The ruling party in the centre has received over 50% of the total money through electoral bonds while the ruling party in the states has received the remaining. Opposition parties that do not hold power in opposition states have not received a single penny, ” Prashant Bhushan, a senior advocate, stated in Supreme Court on Nov 1,2023
Conclusion
An attempt to reform political funding in India via the use of electoral bonds has been put under scrutiny by both critics and the hon’ble court . Electoral bonds have drawn criticism and controversy despite having the ability to increase openness in the political process. Their provision of anonymity to funders raises concerns regarding transparency, responsibility, and possible misconduct of funding. In order to address the issues and maintain the integrity of India’s election process, there is need of more debate and discussion on electoral bonds process which is going on in the court.
