The Supreme Court recently raised concerns over the potential misuse of electoral bonds, used by political parties as a way to raise funds. The misgivings revolve around the possibility of these bonds being used for inappropriate activities such as funding terrorism or violent protests. In addition, the court questioned whether there’s enough oversight on how these donations are used by the political parties.
Understanding Electoral Bonds
The electoral bond is a financial instrument designed for making contributions to political parties. It is available in denominations of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore, with no maximum limit set. State Bank of India holds the authority to issue and cash these bonds, which are valid for only fifteen days post issuance. They are redeemable in the registered account of a political party.
These bonds can be purchased by an individual who is a citizen of India, or any entity incorporated or established in India. They are available for purchase ten days a month in January, April, July and October, as specified by the Central Government. While anyone can buy these bonds, either singly or jointly, the donor’s name isn’t mentioned on the bond.
Controversies Surrounding Electoral Bonds
Despite providing a more transparent alternative to traditional under-table donations due to insistence on cheque and digital transaction trails, the Electoral Bond Scheme has been mired in controversy.
A key issue lies in the anonymity provided by the scheme. Donors – individuals or corporations – are not obligated to reveal their identity when donating. Moreover, as bonds are purchased through the State Bank of India, the government always has access to the donor’s details, creating an information asymmetry that may favor those in power.
Another contentious point is the potential creation of a black money channel. Changes to regulation, including removal of a 7.5% cap on corporate donations, non-requirement of revealing political contributions in profit and loss statements, and removal of provisions demanding corporations to be three years old, undermine the intentions of the scheme.
Government’s Stand on Electoral Bonds
In defense, the government clarified that only parties registered under the Representation of the People Act 1951 are eligible for donations through electoral bonds, and those parties should have secured at least 1% of votes in the previous election.
The government also maintained that the involvement of black money is impossible as donations through bonds can only be paid through cheque or demand drafts, thus following KYC norms.
The Election Commission of India expressed its support for the bonds, showing concern only about the anonymity aspect and urged the court not to cease the scheme, deeming it an improvement from the cash funding system.
The Way Forward
To maintain transparency and accountability in political financing, robust regulation and reform are necessary. Current loopholes that allow the corruption cycle to continue and tarnish democratic quality need plugging.
Voters, too, have crucial roles to play. Through demanding awareness campaigns and rejecting candidates and parties who overspend or offer bribes, voters can drive democracy to higher standards.