THE UNION Finance Ministry has finalised the broad contours of the electoral bonds scheme that was announced this Budget, and is expected to forward it to the Reserve Bank of India, Election Commission and political parties by the month-end to initiate wider consultations. According to the draft norms, each political party would have to open designated accounts for this purpose, with one or two banks being mandated by the RBI for issuing the bonds, which would have to be redeemed within a month or so, said two senior government officials involved in the exercise.
“The matter will be put in fast-forward mode as soon as the recently appointed Economic Affairs Secretary Subhash C Garg takes charge next week. The process is likely to be completed by the end of this month,” said one official.
Asked about issues of transparency raised by the outgoing Chief Election Commissioner Nasim Zaidi, another government official said that the bond’s norms have been drafted keeping in view the concerns pertaining to transparency and money laundering.
On Sunday, Zaidi had told The Indian Express that electoral bonds would impact transparency negatively and that the Election Commission had not been consulted on the issue.
Union Finance Minister Arun Jaitley, during his Budget speech in February, had proposed steps for cleansing political funding, including a ban on cash donations of over Rs 2,000 to a political party from any individual.
Also, he had announced the proposal to issue electoral bonds through which a donor could buy bonds from authorised banks against cheques and digital payments that would be redeemable only in the designated account of a registered political party.
Speaking at an ICAI event Saturday, Jaitley had reiterated that cleansing political funding was a “big challenge” and that the government was working on the electoral bond mechanism to end corruption and ensure that only tax-paid money enters the political system.
The government, in the Budget Session, had also introduced the omission of the first proviso in Section 182 of the Companies Act 2013, which consequently removed limits on corporate donations to political parties.
According to the Finance Bill amendments, the previous limit of 7.5 per cent of the average three-year net profit for political donations has been removed and companies are no longer required to name the parties to which such contributions are made — they will be required to disclose the amount.
Last month, in a letter to the Law Secretary, the Election Commission had flagged the recent amendments in the Representation of the People (RP) Act and the Companies Act, which exempt political parties from disclosing donations received through electoral bonds and remove the cap on corporate contribution to political parties, respectively.
Under Section 29 (c) of the RP Act, political parties have to file contribution reports with details of donors for contributions above Rs 20,000. This was amended in the Budget session of Parliament to introduce a new proviso and explanation that exempt political parties from disclosing donations received from electoral bonds, even if it is above the prescribed limit.