Electoral bonds: All you need to know

Supreme Court in interim order asks parties to share details with poll panel

GN Bureau | April 12, 2019


#Association for Democratic Reforms   #Lok Sabha elections   #political funding   #Arun Jaitley   #electoral bonds   #Supreme Court   #Election Commission  
Illustration: Ashish Asthana
Illustration: Ashish Asthana

A bench headed by chief justice of India Ranjan Gogoi in interim order on Friday asked all parties to submit receipts of the electoral bonds to the EC in sealed covers, while posting the matter for detailed hearing at an “appropriate date”. The background to the debate:

 
What is the electoral bond scheme?
Political parties are voluntary organisations and not profit-making bodies. They run on donations, which unfortunately are often in cash – in black money. As part of the government’s drive against black money, soon after the demonetization of November 2016, the budget 2017 announced the electoral bond scheme to clamp down on this channel of underground economy. It was notified in the gazette on January 2, 2018.
 
How does the scheme work?
Any individual or organization can buy electoral bonds (of Rs 1,000, Rs, 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore) from the specified branches of the State Bank of India, during ten days at the beginning of every quarter. The bank issues the bonds only after a KYC, establishing the identity of the bond buyer. The buyer can then give the bonds to the political party/parties, which can deposit the same in their bank accounts. The bank accounts are verified by the election commission (EC). The bond works like a promissory note or a bearer bond.
 
How does this curb corruption?
The budget 2017 capped the maximum amount of cash a party can accept in donation to Rs 2,000, promoting payments through cheques, digital platforms and these bonds. The bonds have the full money trail in the bank, though the political party at the receiving end would not know the identity of the donor. Finance minister Arun Jaitley has maintained that the scheme is a step towards transparency.
 
What is the criticism of the scheme?
Civil society activists have argued that, forget transparency, the scheme is actually increases opaqueness – especially for the voter, who has no way to figure out which corporates or interest groups have given how much donation to which political party. Earlier, this was possible as the names of all donors for amounts above Rs 20,000 would be revealed in the statements parties file with the EC. That bit of transparency is gone with the electoral bonds.
 
Is the criticism valid?
While the finance minister has repeatedly spoke of enhanced transparency, in the supreme court the government has admitted otherwise. In opposing the interim plea by the Association for Democratic Reforms (ADR) seeking a stay on the electoral bonds, attorney general KK Venugopal argued in the supreme court that “transparency cannot be the mantra”. He also said, “why should voters know where the money of the political parties is coming from”. 
 

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