Electoral bond scheme

9th February, 2022 Polity

Figure 1: No Copyright Infringement Intended

Context:

The Electoral bonds worth Rs 1,213 have been sold by the State Bank of India with a majority of them being encashed in the New Delhi branch.

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 ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 crore and will be available at specified branches of State Bank of India.
They can be bought by the donor with a KYC-compliant account.
Donors can donate the bonds to their party of choice which can then be cashed in via the party's verified account within 15 days.

Every registered party which has secured at least one per cent of the votes polled in the most recent Lok Sabha or State election 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 purchase for a period of 10 days each in the beginning of every quarter, i.e. in January, April, July and October.
The electoral bonds will not bear the name 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 donor is.

Anonymity: voters do not know which individual, company, or organization has funded which party, and to what extent.
The government of the day can always access the donor details by demanding the data from the State Bank of India (SBI) which makes them more powerful.
Printing of these bonds & SBI commission for facilitating the sale and purchase of the bonds is paid from the taxpayers’ money by the central government.
Classification of 1% vote share is arbitrary in nature.
RBI has said the bonds would set a “bad precedent” since it would allow for money laundering and undermine trust in banknotes.

By virtue of the anonymity they offer to donors, electoral bonds have become the most popular route of donation.
In the years 2017-18 and 2018-19, political parties received a total of Rs 2,760.20 crore from electoral bonds, of which Rs 1,660.89 cr or 60.17% was received by the BJP alone.

It had objected to the amendments in the Representation of the People (RP) Act, which exempt political parties from disclosing donations received through electoral bonds.
It described the move as a “retrograde step”.
The Commission had even asked the government to “reconsider” and “modify” the above amendment.

Recently, Supreme Court has allowed the sale of the electoral bonds and held it constitutional in nature. Following are the responses held by supreme court against the charges :

Charges	Court Response
Anonymity of the buyers which allows channelizing of money without public scrutiny.	It ensures that everything happens through the banking channels alone. The purchase as well as encashment of the bonds, happening only through banking channels, is always reflected in documents that eventually come to the public domain.
Financing of the Political Parties by the Corporate Houses	The bonds require fulfillment of the KYC requirements. The Spent money will always reflect on the expense sheet of company.
Influence of the foreign Cooperation by purchase of electoral bonds	Bonds can be purchased only by a person who is a citizen of India or incorporated or established in India.
It will lead to flow of black money as it can be sold outside.	Bonds are not tradable under clause 14. Moreover, the first buyer will not stand to gain anything out of such a sale except losing white money for the black.