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Tuesday, December 10, 2019

What are Electoral Bonds?

The Finance Bill, 2017 introduced “Electoral bonds” as interest-free bearer instruments (like Promissory Notes) that will be available for purchase from the State Bank of India within a designated window of 10 days in every quarter of the financial year. 

By: Express Web Desk | New Delhi | Updated: November 21, 2019 1:31:08 pm
What are Electoral Bonds? The Congress raked up the issue of the electoral bonds scheme in the Lok Sabha on Thursday.

A day after the Congress alleged that electoral bonds have turned out to be a black money recycling and political bribery scheme, the raised the issue in Lok Sabha Thursday, with senior party leader Manish Tewari saying it has made corruption official. On Wednesday, Congress demanded that the government disclose the identity of all donors and reveal in Parliament information regarding donations received by all political parties.

Alleging that the scheme of electoral bonds resulted in money-laundering and destroyed transparency in the funding of political parties, senior Congress leader Ghulam Nabi Azad said, “What we are talking about today leads straight to the PM’s office. The BJP govt is running 90 per cent of the business in this country with a few industrialists.”

The Finance Bill, 2017 introduced “Electoral bonds” as interest-free bearer instruments (like Promissory Notes) that will be available for purchase from the State Bank of India within a designated window of 10 days in every quarter of the financial year.  The scheme, which was notified on January 2, 2018, allows individuals and domestic companies to present these bonds — issued in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore — to political parties of their choice, which have to redeem them within 15 days. Buyers of the bonds have to submit full KYC details at the time of buying. But the beneficiary political party is not required to reveal the identity of the entity that has given it the bond(s).

How will electoral bonds help?

Terming its decision to introduce electoral bonds as “a big step towards electoral reform”, the Centre had told the Supreme Court earlier this year that the process envisaged in acquiring and encasing the bonds “will ensure transparency” and “accountability”.

The Union Finance Ministry had said this in an affidavit filed in response to petitions filed by the CPM and others, who alleged that the bonds, by way of which contributions can be made to political parties, sought to create an anonymous and secretive mechanism for increasing the wealth of parties and brought in unreasonable restrictions on the freedom to know the identity of the contributor.

The move, the Centre had said, was part of a “conscious legislative policy” to further electoral reforms “to defeat the growing menace of black money, especially when the country is moving towards a cashless-digital economy”.

What does the Election Commission think of electoral bonds?

In its affidavit to the Supreme Court filed on March 25, the EC said that “any donation received by a political party through an electoral bond has been taken out of the ambit of reporting under the Contribution Report”, and if information on the money received through such bonds is not reported, “it cannot be ascertained whether the political party has taken any donation in violation of provisions” of the Representation of the People Act, which “prohibits the political parties from taking donations from government companies and foreign sources”.

The Commission also flagged the issue of laws being changed to allow political parties to receive contributions from foreign companies, which would “allow unchecked foreign funding of political parties in India which could lead to Indian policies being influenced by foreign companies”.

Congress on Electoral bonds 

The Congress demanded on Wednesday that the government must disclose all details about electoral bonds before Parliament. The party claimed that RTI replies have shown that Prime Minister’s Office intervened to open special windows for political donations through electoral bonds before the Karnataka Assembly elections last year.

While the Leader of Opposition in Rajya Sabha Ghulam Nabi Azad said RTI replies have shown that rules regarding the scheme were flouted at the PMO’s instance, Randeep Surjewala said, “The electoral bond scheme of the Narendra Modi government is a modus operandi to receive thousands of crores from big business houses through secret donations.”

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