ELECTORAL BOND: EXPLAINED

ELECTORAL BOND: EXPLAINED

The total amount collected by parties through the Electoral Bond Scheme has gone up to Rs 10,246 crore from various anonymous donors since its introduction in 2018 as per the SBI report.

Electoral bond scheme

• It was introduced with the Finance Bill, 2017 and for the first time, the EB Scheme was notified on January 29, 2018.
• These bonds are issued in the multiple of RS 1000, RS 10,000 RS 1 lakh, RS 10 lakh, and RS 1 crore without any maximum limit.
• An electoral bond is an instrument through which anyone can donate money to political parties.
• It is like a promissory note that can be bought by any Indian citizen or company incorporated in India with no limit.
• The State bank of India is authorized to issue and encash these bonds, which are valid for fifteen days from the date of issuance.
• 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 even the Legislative Assembly, are only eligible to receive electoral bonds.

Procedure

• One can purchase these electoral bonds only digitally or through cheques.
• These bonds are available for purchase by any citizen of India for a period of ten days each in January, April, July, and October as may be specified by the Central government.
• A person being an individual can buy bonds, either singly or jointly with the other individual.
• The donor’s name is not mentioned on the bond.
• There is no limit on the number of bonds an individual or company can buy.

Individuals, groups of individuals, NGOs, religions, and other trusts are permitted to donate via electoral bonds without disclosing their details.

The donor who contributes less than RS 20,000 to political parties through the purchase of electoral bonds need not provide their identity details such as PAN.

Taxability

The donations would be tax deductible. Hence, a donor will get a deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party.

Advantages of electoral bond

• Transparency: The main idea behind the electoral bond scheme was to bring about transparency in electoral funding in India.
• Digital economy: The government had described the scheme as an electoral reform in a country moving toward a cashless digital economy.
• Ensures Accountability: Donations through Electoral Bonds will only be credited to the party bank account and disclosed with the ECI. Every political party shall be obliged to explain how the entire sum of money they received has been expended.
• Income for Parties: More than half the total income of national parties and the regional parties for the financial year 2018-19 came from electoral bond donations.
• Maintains Anonymity: The individuals, groups of individuals, NGOs, religions, and other trusts are permitted to donate via electoral bonds without disclosing their details and hence it maintains anonymity by not disclosing their identity.

Issue of electoral bond

• Contradiction to its basic idea: the main criticism of the electoral bonds scheme is that it does the exact opposite of what it was meant to do, which is to bring transparency to election funding.
• Distorting Democracy: The introduction of electoral bonds is “distorting democracy” in India. Only 23 political parties are eligible for redemption of electoral bonds.
• Disclosure of the amounts: Even major political parties have not disclosed the amount they received through electoral bonds.
• Through an amendment to the finance ACT 2017, the union government has exempted political parties from disclosing donations received through the electoral bond.
• Even this means that voters will not know which individual, company,y or any organization has funded which party, and to what extent
• Crony-Capitalism: It could also become a convenient channel for the businesses to round-trip their cash parked in tax havens to political parties for a favour or mainly to advantage granted in return for something.
• Shallow Anonymity: Anonymity does not apply to the government of the day, which can always access the donor details by demanding the data from the State Bank of India (SBI).
• Compromising right to know: the Supreme Court has said that the “right to know”, especially in the context of an election, is an integral part of the right to freedom of expression under the Constitution of India.

Way forward

• For the continuance of the Scheme, the principle of anonymity of the bond donor enshrined in the Electoral Bond Scheme, 2018 must be done away with.
• There is a need for bold reform to regulate political funding to break the vicious cycle of corruption and erosion of the quality of democratic polity.
• The government should reconsider and modify certain provisions of the Electoral Bonds Scheme to ensure full disclosure and transparency. This will establish the motto “free and fair election” and lead to the strengthening of democracy.

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