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Electoral Bonds - the legalized form of corruption

This term was not known to the world, especially India until the 2017 union budget announced by the then union finance minister Mr. Arun Jaitley who probably for the first time proposed it and today electoral bonds has been popularized to a great extent.

Government of India through the (2017) Finance bill brought this legislation alive on 29 January 2018 and announced the Electoral Bond scheme to bring the so called –transparency in Indian Elections.

The basic aim and objective of this system was to reduce the rampant political corruption during the elections, it was primarily for not only to stop political funding through unauthentic sources, better known as illegal means but also for bringing substantive and fundamental changes in the entire electoral funding mechanism followed across India. But the reality seems to be something very different from what was expected.

All About An Electoral Bond

An electoral bond is a non – redeemable debt instrument. Designed to be a bearer financial instrument in the manner of a promissory note it is much more similar to a bank note which is liquid able in nature, or generally which is payable to the bearer on demand. This bond can be purchased by any citizen belonging to our country or any corporation registered or established in India.

Electoral bond is an interest free banking instrument which means anybody can buy these bonds and allocate them to any eligible political party of their choice which is recognized under section 29A of peoples representation act 1951 and has garnered at least 1% of the total votes polled in the last elections- can be either parliamentary or assembly these bonds can be brought through bank draft (cheque) or by digital payment only, these are notified from the selected branches of India’s largest public sector bank – the State bank of India and none else, within a period of 10 days each in the first month of a financial quarter ( January, April, July, October).

The electoral bonds can be purchased by the donor in specified denominations of 1000, 10000, 1lakh, 10lakh and up to 1 crore the political parties are allocated these funds through a verified electoral accounts allotted by the Election Commission and further all the electoral bonds transactions are done through this account.

The most significant feature of this scheme is that bonds issued to the parties are anonymous meaning that they don’t carry the donor’s name, although the donor has to fulfill the mandatory KYC( Know your customer ) procedure at the bank and the allocated bonds remain valid only for 15 days. Furthermore no document or assessment report has to be submitted by the receiving parties nor is the donor obliged to reveal the source of his /her donations.

What Was Imagined
The primary purpose of the Electoral bond was to act as a substitute to cash donations and to ensure transparency in terms of sources of political funding. As said by the government of the day, that this system was to infuse white money into the political arrangements and to fight the menace of black money.

However with provisions like anonymity of the donor and their source of donations, the provision of removal of 7.5% limit for the corporate donations, allowing the foreign companies to donate political parties and moreover the recent statics reveled by various organizations show a totally different picture. It tells us that this was just a scheme to legalize corruption in the guise of illusion-ed transparency.

What Has Happened – the controversy regarding these bonds?

While this scheme would have acted as a check for political funding, but as mentioned above some provisions have made this a highly controversial issue, the government is at the center of a controversy over allegations that the ruling party with the help of some other institutions was allowed to access the data of the donor, dangling the norms of the act.

Actually, by the model itself these bonds had provision of anonymity which led to opacity in the funding procedure and the key highlight is that there is no need to disclose the source of income by the donor, which simply gives ample space for dumping all the black money stored in tax- havens and turn them white through these bonds.

The most concerning element is the removal of 7.5% cap on corporate donations, which provides for unaccounted and unlimited donations to these parties, raising another doubt that this can be done for something for something basis between the companies and the political party ,who is going to known it....nobody, except the ruling party itself. what made the matter more complex was the recent RTI report which stated that these concerns were raised by the country’s two apex institutions that is the reserve bank of India and the election commission, both expressed their shared concerns and serious reservations to the government regarding these bonds that these could become tools for money laundering for shell companies in the name of foreign funding and owing to their translucent nature these could be potentially abused, the legislature did not pay any heed to these arguments but methodically steamrolled them all. This states that they blatantly moved on with this scheme undermining all the apex institutions present.

Further more in an another RTI query by an NGO called Association for Democratic Reforms (ADR) the information revealed that 94.5% of the total electoral bonds were received by the ruling party itself, this data itself is sufficient enough to give rise to a number of questions about the systematic dilution of the safeguards provided by other acts and legislation.

Finally, based on the fact that SBI which is a public sector bank will be the sole authority on donor’s details, tells us that based on the proximity, the party in power will always have an upper hand in it.

On these contentions a petition was filed by NGOs ADR and Common Cause in the Supreme Court in January 2018 and the court had heard this in the month of April 2018 and directed certain changes in the time period of liquidation of bonds and accounting, further a plea has been filed before the court seeking a stay on this scheme.

Conclusion
The electoral bond scheme introduced by the government so far has not show any results desired, on the other hand it has further obscured the process of political funding and its source, which was the most fundamental piece of information that voters need to know, affecting their free will and flaunting the norms of a free and fair election.

Finally this scheme cannot be justified until and unless there are some substantial reforms made, with the support of both the executive and the associated organizations.

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