Most political groups seem fairly satisfied with the present arrangement and would not mind this status-quo to continue. The effort, therefore, is to run down any alternative system, which is devised to cleanse up the political funding mechanism, wrote Finance Minister Arun Jaitley in a Facebook post. With black money being the bedrock of party funding, new methods are being sought after urgently. The electoral bonds scheme devised in 2017 is being pitched to assist the Government in bringing transparency in political party funding.
Electoral Bonds and the use
The functioning of political parties results in a large amount of expenditure. This involves costs not only incurred on campaigning, publicity and tours but also on staff salaries, establishment fee, travels and so on. There is a strong need for clarity in affairs pertaining to the sponsorship of political parties, so as to ensure a free and fair election. In the Union Budget released for the year 2017-18, a mechanism was devised to improve upon the system of political funding in India. Electoral bonds were created as a solution to eliminate black money and increase transparency in electoral funding.
These bonds are issued by select branches of State Bank of India upon authorisation by the Central Government and can be purchased by any citizen or organisation in the country. They are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. One lakh, Rs. 10 lakh and Rs. One crore. Donors can purchase this bond and donate it to the party of their choice. However, it is essential that the bond be encashed within 15 days of being received. Moreover, these bonds will only be available for a period of 10 days every three months, January, April, July and October. An additional period of 10 days will be added in the year of the Lok Sabha elections.
Their need?
In a lot of cases, large corporations with huge profits make massive donations towards the party of their choice. This move is guided by an attempt to control parties and governments. It allows such organisations to buy, influence and invest in an easier tomorrow. Further, the usage of black money in funding leads to political encouragement and support of corruption and extortion. It allows for the creation of a criminal-political nexus and enables the law-breakers to become the lawmakers. It also proves to be a discouragement to honest candidates who fall short of funds.
A report from the Association of Democratic Reforms states that around Rs. 11,300 crores was collected over an 11-year period. About 70% of the funding received came from unknown sources.
Political parties receive most of their funds in the form of cash. The Election Commission views cash donations as a big hurdle in the aim of creating a fully transparent system. Until 2017, a rule allowed payment of up till Rs. 20,000 as a donation in cash. Anything above the limit decided was to be paid either through cheques or online transactions. However, the Commission recommended that the upper limit be reduced to Rs. 2000 to help counter injection of black money in large amounts.
Small steps
Earlier, a major step towards creating a clean system was taken by the first NDA government led by Shri Atal Bihari Vajpayee. The Income Tax Act was amended to allow donations to be counted as expenditure. This, in turn, prompted a cut in tax payment. It was hoped that the donors start using cheques as a method of payment. However, many turned to alternatives as they were reluctant to disclose the amount being paid. Despite further amendments made by the UPA government later, only a small fraction of the donations came in the form of cheques.
In the Budget Speech made by Finance Minister Arun Jaitley, he introduced a financial instrument called an electoral bond. While he encouraged payment through cheques or cash, he stated that he was fully aware of its unpopularity owing to the hesitance in disclosing of identity. Therefore, the electoral bond scheme was placed in higher standing to other alternatives. According to him, (it) envisages total clean money and substantial transparency coming into the system of political funding. In this system, the donor, as well as the political party, would have to disclose the number of electoral bonds purchased or received respectively. However, only the donor would know the amount distributed to a political party. This is essential as past experiences show that donors use less-desirable options if faced with unappealing schemes. The choice has now to be consciously made between the existing system of substantial cash donations which involves total unclean money and is non-transparent and the new scheme which gives the option to the donors to donate through entirely a transparent method of cheque, online transaction or through electoral bonds wrote Jaitley in a post.
Is it an effective measure?
Despite attempts at providing transparency, anonymity acts as a serious facilitator of opaqueness. Without the names of the donors and the parties they contribute to, it has made no headway towards pulling the public out of the dark. The Congress is staunchly opposed to the system as it believes that withholding the donors name is a ‘regressive step’ and would give unlimited access to the ruling party to misuse official machinery to ‘coerce’ them. It, therefore, proves to be somewhat lacking in substantial progress over the present system and is fraught with contradictions.
One method to counter any confusion is to make one single fund for all donors to give money to. This fund can then equally be divided amongst all the political parties involved. It is also necessary that the idea of payment through cheque and online platforms is pushed and reliance on cash donations will be decreased. Further, if contributions in cash continue to thrive, all donations and their donors must be recorded to help lift the cover of anonymity. Only then can there be any progress towards an unambiguous society.
Featured Image Source: Got Credit on Visual Hunt / CC BY