Electoral Bond

Friends, have you ever heard about Electoral Bonds. To be very frank, I had never heard about the same till recently. So I am writing about the same

THE ELECTORAL BOND

The scheme of Electoral Bonds was announced during 2017 budget by  Finance minister. The aim of the scheme was to account the donations made to all the political parties.

An electoral bond is designed to be a bearer instrument like a Promissory  Note-in effect, it will be similar to a bank note that is payable to the bearer on demand and free of interest. It can be purchased by any citizen of India or a body incorporated in India.

The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 1 Lakh and Rs 1 Cr, and will be available at specified branches of State Bank of India. The 29 specified SBI branches are in cities like New Delhi, Gandhinagar, Patna, Chandigarh, Bangalore, Mumbai, Jaipur, Lucknow, Chennai, Kolkata & Guwahati. The bonds can be bought by the donor with KYC compliant account. Donors can donate the bonds to their political party of choice which can then be cashed in via the party’s verified account within 15 days.

Every party that is registered under section 29A of the Representative of the Peoples act 1951 (43 of 1951) and has secured at least 1% of the votes polled in the most recent Lok Sabha or State elections will be allotted a verified account by the Election Commission of India. Electoral Bond transactions can be made only via this account.

The Bonds will be available for the purchase period of 10 days each in the beginning of every quarter, ie January, April, July & October as specified by the Central Govt. An additional period of 30 days shall be specified by the Central Govt in the year of Lok Sabha elections.

The Electoral bonds will not bear the names of the donor. In essence, the donor and the party details will be available with the bank, but the political party might not be aware of who the actual donor is. The intention is to ensure that all the donations to a party will be accounted for in the balance sheets without exposing the donors details to the public.

During the budget presentation in Feb 2017, the Finance minister had proposed that the max amount of cash donation that a political party can receive be capped at Rs 2,000, and that parties be entitled to receive donations by cheque or digital mode, in addition to electoral bonds. A donor will get a deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party.

The BJP was the biggest beneficiary of the electoral Bond scheme in 2017-18, receiving bonds worth Rs 210 Cr. This is as per the  audit and income tax reports submitted by the party to the Election commission, it earned Rs 210 Cr through Electoral Bonds, while the Congress, which earned Rs 199 Cr as income in 20187-18, got only Rs 5 Cr in donations from Electoral bonds.

This scheme has been criticised on several grounds. The feature of anonymity of the donor is one of them as neither the donor nor the political party is obligated to reveal from where donations came from. As per the experts this undercuts the freedom of political information, which is an integral element of Article 19(1)(a) of the constitution.

But the scheme is such that it addresses the concerns of donors to remain anonymous to the general public or to rival political parties. From the bonds, no details of the donor nor of the intended political beneficiary can be made out. So electoral bond cannot be identified or associated with any particular buyer or political party. However, some security features are encoded into the bonds to avoid issuance of fake /forged bonds. These include a random serial number invisible to the naked eye. However, the number is not noted by the SBI in any record associated with buyer or political party depositing a particular electoral bond. The number is not being used or can be used to track the donation or the buyer.

Sitaram Yechury, CPM leader filed a plea in SC, that to ‘strike down the Electoral Bond Scheme 2018’ and amendments in the Finance Act 2017, which allow for “unlimited donations from individuals and Foreign companies to Political parties without any record of the source of funding.”

Denying the charge, the govt said ‘the scheme envisages building transparent system of acquiring bonds with validated KYC and an audit trail’. It has a limited window and a very short maturity period which would make misuse impossible, The Electoral bonds will prompt donors to take the banking route to donate, with their identity captured by issuing authority. This will ensure transparency and accountability.

The problem with critics is that they were earlier used to donations by black money, which was always misused. Now with these bonds money goes into party’s specified bank account, and  middle man has no chance of swindling. Earlier who so ever leader used to bring donations to party fund was always keeping his cut. So all these types of leaders are not happy with this scheme. Like some one from press said it is an opaque scheme, nothing is transparent. But it is much better than the earlier dealing in black money and cash. The problem with the political leaders is that, they were over the years have been spoilt with cash economy, and now with digital economy they do not know how to react , other than criticise.

Anil Malik

Mumbai, India

20^th Mar 2019