INTRODUCTION
With the introduction of the Finance Bill in the year 2017, the Electoral Bond Scheme was notified by the government on January 29, 2018. First of all, let us understand the meaning of an electoral bond. Basically, an electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of the State Bank of India. The person(s) or corporate entities which are eligible can then donate the same to a political party of their choice. The bonds are almost similar to bank notes which are payable to the bearer on demand and are actually interest-free. An individual or party will be allowed to purchase these bonds digitally or through a cheque.
Only the Political Parties which are registered under Section 29A of the Representation of the People Act (RPA), 1951 (43 of 1951) and have secured not less than one percent of the votes of the House of the People polled in the last General Election or the Legislative Assembly of the State, are supposed to be eligible to receive the Electoral Bonds. According to the rules, the Electoral Bonds shall be valid for fifteen calendar days from the date which they are issued and no payment shall be made to any payee Political party if the Electoral bond has been deposited after the expiry of the validity period. The Electoral Bond deposited by an eligible Political Party shall be credited on the same day in its account.
ADVANTAGES OF ELECTORAL BONDS
• More Transparency: The first advantage of the electoral bonds is that they help the political parties to operate in a more transparent manner with the election commission, regulatory authorities, and the general public at large.
• Ensures Accountability: Donations through Electoral Bonds will only be credited to the party bank account disclosed with the ECI. As encashment of all the donations is majorly done through the help of banking channels, every political party shall be supposed to explain how the entire sum of money received has been expended by them.
• Discouraging Cash: The Purchase of electoral bonds will be possible only through a limited number of notified banks and that too through the use of cheques and digital or online payments. The use of cash is not encouraged in this.
• Maintains Anonymity: The individuals or groups of individuals, non-government organizations, religious and several other trusts are permitted to donate via electoral bonds without disclosing their complete details. Therefore, the identity of the donor is preserved and remains anonymous.
CHALLENGES FOR ELECTORAL BONDS
• Hindering Right to Know: The first challenge of electoral bonds is that the voters will not get to know which individual, company, or organization has actually funded which party, and to what extent. Before the introduction of electoral bonds, political parties were supposed to disclose details of all those donors who donated more than Rs 20,000. The change really infringes on the citizens’ ‘Right to Know’ and this leads to the unaccountability of the political parties.
• Shallow Anonymity: Anonymity is not really upheld by the government which can always access the details of the donors by demanding their data from the State Bank of India (SBI). This implies that the only people in the dark about the source of these donations are the taxpayers.
• Unauthorized Donations: Many times there is a situation where the contribution is received through the help of electoral bonds which are not reported. On perusal of the contribution report of political parties, it cannot really be ascertained whether the political party has taken any donation(s) in violation of the provision under Section 29B of the RPA, 1951 which restricts the political parties from taking donations from the government agencies.
• Leading to Crony-Capitalism: It could become a more convenient and suitable channel for businesses to round-trip their cash parked in tax havens to political parties for a favor or advantage granted in return for something. Anonymous funding might lead to an infusion of black money which is a big disadvantage of this.
• Loopholes: Last disadvantage of electoral bonds is that the corporate entities may not receive the advantage of transparency as they might have to put forward the amount which is donated to the Registrar of Companies. Electoral bonds eliminate the 7.5% cap on company donations which means even loss-making companies can make unlimited donations.
WAY FORWARD
There is a serious need for the effective and judicial regulation of financing of political issues along with major and great reforms to break the huge cycle of corruption that is prevailing in the country, leading to the erosion of the quality of democratic politics. It is important to plug the loopholes in the current laws to make the entire governance machinery more accountable and transparent. Voters can also help bring in major changes by demanding transparency and through more and more awareness campaigns.
Written by Anmol Panwar
Edited by Madiha Tariq