Electoral bonds have been a topic of significant debate and controversy since their introduction in India. These financial instruments were designed to enhance transparency in political funding, but their implementation has sparked discussions on anonymity, transparency, and fairness in political finance. In this article, we’ll delve into what electoral bonds are and the key features that have generated both support and criticism.
What Are Electoral Bonds?
Electoral bonds are bearer instruments, combining the characteristics of a promissory note and an interest-free banking instrument. Citizens of India and bodies incorporated in India are eligible to purchase these bonds, and they are available in multiple denominations: 1,000, 10,000, 1,00,000, 10,00,000, and 1,00,00,000.
Key Features of Electoral Bonds
1. Eligibility and KYC Norms: To purchase electoral bonds, individuals must be Indian citizens, while corporate entities must be incorporated in India. Purchase requires strict adherence to Know Your Customer (KYC) norms, and payment is made from a bank account.
2. Anonymity: Electoral bonds offer a level of anonymity to donors. While the bank knows the identity of the purchaser, this information is kept confidential from both the recipient political party and the general public. This feature was implemented to safeguard donors from potential repercussions or retaliation related to their political contributions.
3. Limited Validity: Electoral bonds have a brief shelf life of 15 days during which they can be used to make donations only to registered political parties under Section 29A of the Representation of the Peoples Act, 1951 and which secured not less than one per cent of the votes polled in the last general election to the House of the People or a Legislative Assembly.
4. Availability Period: Electoral bonds are available for purchase for 10-day periods in the months of January, April, July, and October, as specified by the Central Government. An extended period of 30 days is set during the year of the General Election to the House of the People.
5. Encashment: The encashment of electoral bonds can only be done by eligible political parties through a designated bank account with the authorized bank. These bonds are exclusively meant for registered political parties and cannot be encashed by individual candidates.
Controversies Surrounding Electoral Bonds
Despite their intended purpose to enhance transparency in political funding, electoral bonds have raised several concerns and controversies:
1. Anonymity vs. Transparency: Critics argue that the anonymity offered by electoral bonds hampers transparency. The lack of publicly available information about donors makes it difficult to trace the sources of political funding.
2. Potential Misuse: Concerns have been raised that electoral bonds could be used to channel unaccounted “black money” into the political system, given the anonymity of donors.
3. Fairness: Critics claim that electoral bonds could disproportionately benefit the ruling party, as they may have more access to donor information, potentially providing an advantage.
4. Lack of Accountability: The absence of stringent disclosure requirements and a transparent audit trail for electoral bonds has been a point of concern.
The Legal Battle
Electoral bonds have been a subject of legal challenges. In April 2019, the Supreme Court of India ruled that electoral bonds were permissible, but this matter remains a subject of ongoing debate and legal scrutiny. Recently, the Supreme Court has scheduled a hearing for October 31 to review a series of petitions that question the legality of the government’s electoral bonds scheme as a means of financing political parties.
Conclusion
Electoral bonds, introduced to reform political funding and increase transparency, continue to spark intense debate. The ongoing discussion highlights the complexities of achieving transparency in a political system reliant on financial contributions from individuals and corporations. The balance between political transparency and donor anonymity remains at the core of this controversy.
Note for UPSC Aspirants: For UPSC aspirants interested in exploring further, here are some keywords to guide your research: Promissory Note, Financial Instruments, Political Parties, Representation of the Peoples Act, 1951, Election Commission.
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