After the Supreme Court refused to give interim stay on the controversial scheme, let us first understand the scheme in detail and discuss why the scheme is being condemned by the opposition parties and others.
What is electoral bond, how it works, and why it is under fire
The electoral bonds scheme, which boasts of cleansing political funding system by curbing black money, has of late come under severe criticism, for, the identity of the donor can continue to be hidden under the process. After the Supreme Court refused to give interim stay on the controversial scheme, let us first understand the scheme in detail and discuss why the scheme is being condemned by the opposition parties and others:
What are electoral bonds?
An electoral bond is a debt instrument, which people can buy from the bank, and donate to a political party. The political party then can encash the bond by selling it back to the bank. Any citizen of India or a body incorporated in India, who wishes to donate to a political party for more than Rs 2,000 can do so by way of electoral bonds.
The government, during the 2017-18 union budget, had introduced the idea of electoral bonds scheme to cleanse the political funding system and promote the cashless economy. In January 2018 it had notified these bonds.
The electoral bond is a bearer instrument in the nature of promissory note, payable to the bearer on demand. The bearer instrument is the one which doesn’t carry the name of payee, so whosoever is in the possession of this instrument can encash it on demand. It is an interest free instrument.
These bonds can be purchased for any value in multiples of Rs 1,000, Rs 10,000, Rs 10 lakh, and Rs 1 crore from any of the specified branches of the State Bank of India. The purchaser is allowed to buy these bonds only on due fulfilment of all the KYC norms and by making payment from a bank account. These bonds don’t carry the name of the donors, so the anonymity of the donor is easily maintained.
Likewise, no detail of political party depositing the bonds is noted on the electoral bonds. So, no electoral bond can be identified or associated with any particular purchaser or a political party who deposits it.
The electoral bonds are valid for 15 days during which they have to be encashed by the political parties through a designated bank account with the authorised bank. “The political funding mechanism developed over the last 70 years has faced widespread criticism as people do not get clear details about how much money comes from where it comes and where it is spent,” Arun jaitley had said earlier in 2018, when these bonds were notified.
Why electoral bonds scheme is facing criticism
The scheme is being condemned for it involves anonymous donation. The Bharatiya Janata Party seems to have gained most from the scheme by getting 95% of the funds raised through these bonds amounting to Rs 210 crore, while the other political parties got a meager funding of Rs 11 crore.
As Election Commission told the Supreme Court on Thursday, the BJP received Rs 997 crore and Rs 990 crore through donations in 2016-17 and 2017-18 respectively, five times more than what Congress received in those two years, The Times of India reported.
According to NGO Association for Democratic Reform or ADR, from a total of Rs 990 crore donation the BJP received in 2017-18, Rs 437.04 crore was from known sources and Rs 553.38 crore income was from hidden sources.
SBI had sold electoral bonds worth Rs 1056.73 crore in March, April, May, July, October and November, it said in 2018 in response to an RTI query Pune-based Vihar Durve, Business Standard had reported. In January and March 2019 the bank sold Electoral Bonds worth Rs 1716.05 crore, the response said. The sale shows an increase of 62 per cent from those sold during 2018.
Defending the scheme, Arun Jaitley in a tweet on April 7, had said, “Electoral Bonds are all Tax paid and declared money. Parties declare how many bonds they got. The Donors declare the bonds they bought – all white money and better transparency. However, many well-meaning persons have a problem for every solution – No better solution.”