How electoral bonds work?

Understanding Electoral Bonds in India: Transparency or Opaqueness?

India's electoral bonds have emerged as a unique instrument in the nation's political funding landscape. Launched with the intent to enhance transparency in political donations, these bonds have sparked considerable debate. In this article, we delve into how electoral bonds work, their intended purpose, and the controversies surrounding them.

How electoral bonds work?

 

What Are Electoral Bonds?

Electoral bonds are a financial instrument introduced by the Government of India in 2018 to facilitate donations to political parties. These bonds can be purchased by any citizen of India or entity incorporated or established in India. The bonds are issued in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore, and are available at designated branches of the State Bank of India (SBI) during specified periods.

How Do Electoral Bonds Work?

1. Purchase of Bonds: Individuals or corporations can buy electoral bonds from designated SBI branches. The bonds are available for purchase in the months of January, April, July, and October for ten days each, as well as an additional 30 days in a year as specified by the central government.

2. Anonymity and KYC: While purchasing these bonds, buyers must fulfill Know Your Customer (KYC) norms, ensuring that the identity of the buyer is verified. However, the identity of the donor remains anonymous to the public and the political parties.

3. Donation to Political Parties: The purchased electoral bonds can be donated to any eligible political party. To be eligible, a political party must be registered under section 29A of the Representation of the People Act, 1951, and must have secured at least 1% of the votes polled in the last general election to the Lok Sabha or the state legislative assembly.

4. Redemption: The political party can redeem the bonds through its designated bank account within 15 days of the issuance of the bond. If not redeemed within this period, the bond expires and the amount is credited back to the donor's account.

Intended Purpose

The primary aim behind introducing electoral bonds was to enhance transparency in political funding. By routing donations through banking channels, the government intended to reduce the use of cash in political donations, thereby curbing black money in the electoral process. The bonds were also expected to streamline the donation process, making it more accountable and traceable.

The Transparency Debate

While electoral bonds were introduced with the promise of greater transparency, they have sparked significant controversy and criticism for several reasons:

1. Anonymity: The anonymity provided to donors has been a major point of contention. Critics argue that this provision undermines transparency, as the public and even the Election Commission cannot trace the source of the donations. This raises concerns about the potential influence of undisclosed corporate or foreign entities on political parties and policy-making.

2. Disproportionate Influence: There are concerns that electoral bonds favor the ruling party, as donors may prefer to contribute to the party in power, hoping for favorable policies or protection of their interests. This could lead to an imbalance in political competition and democratic processes.

3. Lack of Public Disclosure: Unlike earlier practices where donations above a certain limit had to be disclosed to the Election Commission, electoral bonds do not require such transparency. This lack of disclosure means that large sums of money can be channeled into the political system without public scrutiny.

4. Supreme Court Cases: The legality and constitutionality of electoral bonds have been challenged in the Supreme Court of India. Petitioners argue that the bonds compromise the principles of free and fair elections and violate the citizens' right to information.

Government's Defense

The government defends electoral bonds, asserting that they are a cleaner alternative to cash donations. According to the government, the bonds ensure that all donations are made through legitimate banking channels, which helps in tracking the flow of money and reduces the risk of black money entering the political system. The anonymity, they argue, protects donors from political retribution and harassment.

Conclusion

Electoral bonds in India represent a significant shift in the political funding framework, aiming to bring more transparency and reduce the role of black money. However, the debate over their effectiveness and impact on democratic processes continues.