The government is considering permitting the sale of electoral bonds in the lead up to the Assembly elections in Bihar set for October-November 2020. These bonds, stipulated by The Electoral Bond Scheme of 2018, offer a pathway for contributing financially to political parties. However, there are numerous aspects to consider and potential controversies to navigate associated with these bonds.
Understanding Electoral Bonds
An electoral bond serves as a financial means to donate to political parties. These bonds can be issued in varying amounts, including Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, and Rs. 1 crore without an upper limit. The State Bank of India has exclusive authorization to issue these bonds, which remain valid for fifteen days from the issuance date.
Only registered political parties with an account approved by the Election Commission of India can redeem these bonds. Eligible parties must have secured at least 1% of the votes polled in the recent Lok Sabha or state election. All transactions involving electoral bonds can only go through this account.
Purchasing Electoral Bonds
Any Indian citizen or entity established within India can purchase these bonds, typically available for ten days each in January, April, July, and October. Individuals may buy these bonds either individually or jointly with others. Notably, buyers’ names are not present on the bond.
The government can also extend the sale period by thirty days during general elections. However, exceptions have occurred, such as the sixth tranche of electoral bonds being issued in November 2018 and bonds being sold in March, April, and May during the 2019 general elections.
Controversial Aspects of Electoral Bonds
While this scheme presents a check against under-the-table donations by insisting on paper trails, several key elements make it controversial.
Anonymity: Neither the donor nor the political party needs to disclose the donation’s origin. The Supreme Court held in 2019 that all parties who received donations through electoral bonds should provide this information to the Election Commission of India.
Lack of Transparency: Concealing the identity of major donors from public scrutiny conflicts with the principle of transparency in political finance.
Asymmetric Opacity: The government can always know the donation’s source as the bonds are purchased through the SBI. This information imbalance could potentially color the process to favor the ruling party.
Channel for Black Money: Removing a 7.5% cap on corporate donations, doing away with revealing political contributions on profit and loss statements, and cancelling a clause requiring a corporation to exist for three years compromises the scheme’s intent.
The Path Ahead
To combat these issues, significant changes are needed, such as implementing effective regulation of political financing and introducing bold reforms to end corruption and improve democratic quality. Tightening current laws to enhance accountability and transparency in the governance system is critical. Voters also have a role to play by demanding awareness campaigns, and by rejecting candidates and parties that overspend or bribe.
