Electoral Bonds (EBs), legislation designed to streamline the donation process to political parties, have recently made headlines in India. State Bank of India (SBI) data shows that over Rs 10,000-crore donations have been facilitated through these bonds since their introduction in 2018, with Rs 389.5 crore collected at the 21st sale in July 2022 alone. The rise in these donations raises questions about the EB scheme’s efficacy and potential implications.
What Exactly Are Electoral Bonds?
SBI is responsible for issuing and encashing Electoral Bonds. These legal instruments allow anonymous donors to contribute funds to a given political party. Purchasers can acquire these bonds, valid for 15 days from the issue date, and provide them to a political party, who can then deposit them into its own bank account. The bonds are offered in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, and made available to any Indian citizen during ten-day intervals in January, April, July, and October.
Only political parties registered under Section 29A of the Representation of the People Act, 1951, and those that received at least 1% of votes in the most recent general election to the House of the People or the Legislative Assembly are allowed to receive electoral bonds.
Critiques and Concerns Surrounding Electoral Bonds
Despite this new method for facilitating political donations, critics argue that the Electoral Bonds system contradicts its original purpose of fostering transparency in election funding. Because Electoral Bonds are sold through a government-owned bank, there are concerns that the government can monitor who is funding opposition parties, potentially extracting money from large corporations or penalizing those who fail to support the ruling party. This could provide an unfair advantage to the party in power.
A Potential Setback for Democracy
Amendments in the Finance Act 2017 have enabled political parties to receive donations via Electoral Bonds without disclosing the source of these funds. This prevents voters from knowing who is financing which party, potentially undermining the principles of representative democracy. Critics argue this violates citizens’ constitutional “right to know” and could impede free and fair elections.
Crony Capitalism: A Potential Outcome of Electoral Bonds
By eliminating former restrictions on political contributions, EBs might encourage a form of crony capitalism, an economic system where businesses and government officials engage in mutually beneficial relationships. Large corporations with abundant resources can influence elections through substantial donations, fostering a potential ecosystem of corruption and eroding democratic standards.
The Way Forward: Regulatory Reforms and Voter Awareness
Given these concerns, there’s a growing demand for stringent regulation of political financing and substantial reforms to counter corruption and safeguard democratic values. It’s also seen as crucial to address existing legislative loopholes to ensure transparency and accountability in governance machinery. Moreover, voters can make a significant difference by demanding awareness campaigns and rejecting candidates or parties that overspend or resort to bribery, arguably propelling democracy a step further.