In a bid to make political funding more transparent, the government outlined contours of the new electoral bonds. A donor can buy electoral bonds from State Bank of India (SBI) and the political parties can encash only through a designated bank account. The electoral bonds will be available at specified branches of State Bank of India (SBI) for 10 days each in months of January, April, July and October. These bonds with a life of only 15 days can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. They will not carry the donor’s name even though the purchaser would have to fulfil KYC norms at the bank.
While announcing the scheme of the electoral bonds Union Finance Minister Arun Jaitley said in the Lok Sabha, “This will be cleaner money coming from the donor, cleaner money coming into the hands of a political party and there would be a significant amount of transparency.”
THE BACKGROUND
With this announcement the Union Finance Minister has fulfilled his promise made in his last budget speech wherein he said, “As an additional step, an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard. Under this scheme, a donor could purchase bonds from authorised banks against cheque and digital payments only.”
He has stressed that this scheme will bring in substantial amount of transparency in political donations. “The element of transparency is that the donors who buy these bonds, their balance sheets will reflect they bought these bonds. Political parties will file their returns to the Election Commission and collectively also say this is the extent of bonds we have received.” This particular measure of the government is in continuation of the amendment in Section 13A of the Income Tax Act whereby donation in cash to any political party has been restricted to Rs. 2,000.
THE OVERVIEW
These bonds with a life of only 15 days can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. The benefit will be available only to any registered political party which has secured at least 1 per cent vote in the last election. There is a conspicuous element of secrecy in this otherwise transparent system. It is too obvious to be noticed, although it has been shrouded beautifully. The electoral bond will not carry name of the donor. And mere purchase of bond will be sufficient expenditure for a donor and its ledger may not record the name of the political party or parties to whom these bonds are provided. Further, the books of accounts of the political parties need not keep trace of the donors as the total amount of bonds received and encashed will suffice all accounting and auditing needs.