News Highlight
Ahead of the Gujarat and Himachal Pradesh polls, the Center amended the Electoral Bond Scheme on Monday.
Key Takeaway
- The Ministry of Finance on November 7 issued a notification for amending the scheme to provide “an additional period of 15 days” for their sale “in the year of general elections to the Legislative Assembly of States and Union Territories with Legislature”.
- The bonds under this scheme are usually made available for purchase by any person for ten days each in January, April, July and October.
Electoral Bonds Scheme
- About
- The Electoral Bond Scheme was introduced in 2018 as an alternative to cash donations to political parties.
- Issuing agency
- State Bank of India is authorised to issue and encash these bonds.
- Validity
- Electoral bonds are purchased anonymously by donors and are valid for 15 days from the date of issue.
- As debt instruments, donors can buy these from a bank, and the political party can encash them.
- Denominations
- The bonds are issued by SBI in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore.
- Eligibility
- Only the political parties registered under Section 29A of the Representation of the People Act, 1951 and have secured not less than 1% of the votes polled in the last general election to the House of the People, or the Legislative Assembly are eligible to receive electoral bonds.
- Features
- An Electoral Bond is like a promissory note that may be purchased by a person who is a citizen of India or incorporated or established in India.
- A person being an individual can buy Electoral Bonds, either singly or jointly with other individuals.
- The bonds are like banknotes payable to the bearer on demand and are interest-free.
Benefits of Electoral Bonds
- Discouraging Cash
- The Purchase will be possible only through a limited number of notified banks and through cheques and digital payments.
- Cash will not be encouraged.
- Transparency
- It helps the political parties operate more transparently 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 Election Commission of India (ECI).
- As encashment of all the donations is through banking channels, every political party shall be obliged to explain how the entire sum of money received has been expended.
- Maintains Anonymity
- The individuals, groups of individuals, Non-Governmental organisations (NGO), religious and other trusts are permitted to donate via electoral bonds without disclosing their details.
- Therefore, the identity of the donor is preserved.
Challenges for Electoral Bonds
- Hindering Right to Know
- Voters will not know which individual, company, or organisation has funded which party and to what extent.
- Before the introduction of electoral bonds, political parties had to disclose details of all their donors who had donated more than Rs 20,000.
- The change infringes on the citizens ‘Right to Know and makes the political class even more unaccountable.
- Loopholes
- Corporate Entities may not enjoy the benefit of transparency as they might have to disclose the amount 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 etc.
- Leading to Crony-Capitalism
- It could become a convenient channel for businesses to round-trip their cash parked in tax havens to political parties for a favour or advantage granted in return for something.
- Anonymous funding might lead to an infusion of black money.
- Affect Shareholders
- As companies no longer need to declare the names of the parties, shareholders of the companies won’t know where their money has gone.
- Undemocratic
- As the scheme was introduced through a money bill route and not debated in the upper house (Rajya Sabha); hence it is undemocratic.
Way forward
- Cash donations
- The cap of Rs 2000 for cash donations offers an opportunity for the flow of black money into elections. This should be eliminated altogether.
- Election Commission has suggested that parties should be made to disclose funds received in cash for smaller sums in case they exceed 20 per cent of the total funds raised. This suggestion can be considered.
- Intensive scrutiny
- Intensive scrutiny of election expenditures incurred by parties and candidates is needed in order to ensure the detection of black money in the system.
- National Electoral Fund
- Set a National Electoral Fund, as suggested by the former Chief Election Commissioner S.Y.Quraishi shall also be explored, to which all donors can contribute, and the funds are distributed among the parties.
- State funding of elections
- State funding of elections shall be explored to bring all parties on a level playing field and to make private donations less relevant.
- Simultaneous elections
- Simultaneous elections for the Parliament and state legislatures should be considered since a shorter campaign period will limit expenses incurred by parties.
Content Source: The Hindu