By Arsh Rampal
Finance Minister Arun Jaitley on 2nd January 2018 announced the details of the new electoral bonds aimed at making political funding transparent. Donors can buy the bonds from the State Bank of India. Each bond will have a validity of 15 days, and they will be sold for ten days at the start of each quarter.
What are electoral bonds?
Electoral bonds are a bearer-instrument in the nature of a promissory note. They are interest-free and can be bought by any citizen of India or body incorporated in India. These bonds will be available in values in multiples of ₹1,000, ₹10,000, ₹10 lakh, and ₹1 crore, and can be bought at specified branches of the State Bank of India. They will be available for ten days at the start of January, April, July and October. In the year of the general election, they will be available for a period of 30 days. These bonds can then be used to make donations to a political party of the person’s choice.
How do they work?
In order to purchase the electoral bonds, the purchaser would have to complete all the KYC (Know Your Customer) norms and make the payment from a bank account. The donation, however, will not carry the name of the payee. The payment will still be reflected on the balance sheet of the bond purchaser.
A donation can only be made to political parties that have secured not less than one percent of the votes polled in the last Lok Sabha or Assembly election. Each political party would have to designate one account to which all the donations will be made. The party will then have to file their returns with the Election Commission.
Why it matters
Political funding in India has lacked accountability for decades. The introduction of electoral bonds will bring in some transparency to the mostly opaque scenario of political financing in India. The amount of money and the source of political funding will be known through the current process. The identity of the person donating will, however, remain anonymous. Thus the move does not push transparency to the limit that it can.
The bonds can only be purchased by completing KYC norms and through a bank account. This ensures that black money is not being utilised to fund political parties. The donations via electoral bonds can only be made to political parties having at least one percent vote share. This prevents bogus political parties from collecting contributions before elections.
Electoral bonds introduce transparency to the system of political funding; however, it lacks incentives for the donators to shift to it. An electoral bond can be bought for as low as ₹1000 so that the common man can afford it. For an amount that low, why would a common man go through the tedious process of buying an electoral bond and then donating it to a political party of his choice?
The government needs to ensure that donations through electoral bonds become the general norm. The process of buying and donating electoral bonds should be made easier and accessible for everyone. Donations by cash should be discouraged and digital transactions promoted. The identities of donators should also be revealed to increase transparency.
Featured Image Source: Unsplash