By Priyale Chandra
Finance minister Arun Jaitley has recently announced the introduction of electoral bonds, in order to create transparency in electoral financing. He claims that these bonds will substantially cleanse the system.
What are electoral bonds?
Functioning like a promissory note, these bonds can only be availed through select State Bank of India (SBI) outlets for 10 days each in January, April, July, and October. Valid only for 15 days, these bonds can be cashed in only by the registered political parties, through an account verified by the Election Commission. The bonds will be available in multiples of ?1,000, ?10,000, ?1 lakh, ?10 lakh and ?1 crore.
The bonds will not carry the name of the bearer(s). While the purchaser will have to fill in the Know Your Customer (KYC) details, they will remain anonymous. Eventually, the parties will cash in the bonds and submit their account details to the Election Commission.
What is the rationale behind this move?
Electoral bonds were first announced in the 2017-2018 budget speech. They are the latest in a series of moves implemented by Mr Jaitley to curb the incidence of black money in political funding. Earlier, he had banned cash donations over ?2,000 for the purpose of political campaigning and also introduced a mechanism of online donations to political parties.
Presently, most of the funding to political parties is through cash donations. The move is believed to reduce dependence on cash donations and also ensure transparency in the funding of political parties. This measure is linked to the initiative of the government to fight corruption and seize black money.
How effective is this measure?
Reading through the fine print of this measure, it becomes clear that the move is not actually reformative. Not just individuals, but non-governmental organisations and corporate companies can also buy these bonds. There are neither checks nor a system of balances in place to verify the details of the donors. The only place where the donation will be reflected is in the bank statement of the donor.
It is nearly impossible to recheck the balance sheets of individual donors or companies to detect incidences of impropriety. This loophole reflects the possibility of black money entering the system through shell companies. While Arun Jaitley argues that making the donor details public might force the entire arrangement once again to shift to cash, there is virtually no guarantee that anonymous donations through electoral bonds will ensure a cleaner system.
There is also a matter of corporate donors. Corporate companies are believed to be one of the biggest donors to political parties. The introduction of electoral bonds does not ensure any added scrutiny to political funding. What it does provide is an obfuscation about donors in the form of a new means of political funding.
Featured Image Source: Flickr