With Lok Sabha Election 2019 Knocking At Door, Know What Electoral Bonds Are
Before 2017, it was a rule that if a political party gets a donation of less than Rs. 20,000 from a donor, then it was not mandatory to reveal the source of fund. This rule was misused and near about all the political parties said that they received 90% of their political fund in the denomination of less than Rs. 20,000. So in this way, a huge amount of black money generated and used in the election campaigning. On the basis of the recommendation of the Election Commission, the government had reduced the limit of anonymous donation to Rs. 2000 only in budget 2017. It means; for a donation of more than Rs 2000, the political party will have to reveal the source of donation.
What is electoral bond?
Electoral Bond refers to a bond which has its specified face value, mentioned on it like a currency note. These bonds can be used by individuals, institutions and organizations to donate money to political parties. The central government had announced to launch electoral bonds during the budget of the financial year 2017-18. This initiative was taken to ensure transparency in the election funding of the political parties by introducing electoral bonds worth Rs 1,000, Rs 10,000, Rs 1 lac, Rs 10 lacs and Rs 1 crore that can be bought from selected branches of State Bank of India by any citizen of India.
Every party which is registered under section 29A of the Representation of the Peoples Act, 1951 and has secured at least 1% votes polled in the most recent Lok Sabha or State election will be eligible to receive fund through electoral bonds. Every donor has to give his KYC details to the bank and the bank shall keep the identity of the buyer secret. The bonds will be available for purchase for a period of 10 days each in the beginning of every quarter. In the year of Lok Sabha elections, 30 days extra will be provided. The political parties would have to inform the election commission about the funds they have collected through bonds. According to this scheme, anyone can buy the donor bond from this bank, which will be encashed within a time limit. These bonds are then redeemable in an account which is owned by one party. One political party will have one account.
But some critics believe that in this rule, the identity of the donors will be kept confidential; so the real results of electoral bonds will not be much encouraging. Actually, there are many grey areas in this because when there is no ceiling on party expenditure and the EC cannot monitor it, how can you be sure that what is coming in is not black money as there is a secrecy about the donor. Even foreign money can come and even a dying company can give money now because the clause that insisted that only companies with minimum 7.5% profit in last three years could donate has been removed. So, prima facie it appears the scheme cannot really deliver what it wants. Unregulated expenditure, paid news and fake news are major emerging threats to any election as pointed out by the ECI.
Protect donor or black money?
The government says this scheme would allow anonymity to the donor hence removing chances of political victimization. If required, enforcement agencies can always check the details of donors from banking channels. The government turned the spotlight on how India jumped several points to 78 in the corruption index from its earlier position 94, where it had been lying stagnant since 2012. With this, the government has taken the Election Commission of India (ECI) head-on on the issue of electoral bonds even as there are only a few more days to go before Lok Sabha polls kick off on April 11. Government also said political funding had become a “parallel economy”. Political parties were floated merely to generate and handle tainted cash.
There are some grey areas which include whether or not the donor will be able to redeem his donations in the future and whether or not interest should be paid to the donor. The top court is hearing a batch of pleas questioning the validity of and seeking a stay on the scheme, which was introduced in January 2018. The petitioners include the Association for Democratic Reforms and Communist Party of India (Marxist) General Secretary Sitaram Yechury. The Centre filed a fresh affidavit before the Supreme Court on Wednesday,3rd March 2019, saying electoral bonds were a positive step in the right direction to ensure “accountability and transparency” in conducting elections and adding that the Election Commission’s objections are “without legal or factual merit”. On March 27, the ECI had filed an affidavit before the Supreme Court, saying that the introduction of electoral bonds coupled with the removal of cap on political funding by the Narendra Modi-led government will have a “serious impact” on the transparency of political funding. The Association of Democratic Reforms has sought a stay in the scheme, claiming that it has opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies, which can have serious repercussions on the Indian democracy.
This scheme is one of its kind. With no other democracy to learn from, only time will tell whether this would curb corruption. Why not make poltical campaigns state funded? No money or muscle power as same starting line would make election an even contest, food for thought.