In a significant development to evolve a transparent political funding system and to cleanse the system of political funding in the country and in keeping with the government’s desire to move to a cashless economy, the government of India has come up with the new scheme of electoral bonds. In the new mechanism of electoral funding through issuance of bonds the quantum of money which a donor has contributed to a political party would only be known to the donor. The electoral bonds will not bear the name of the donor. The intention is to ensure that all the donations made to a party will be accounted for in the balance sheets without exposing the donor details to the public.
As explained by the Union Finance Minister Arun Jaitley the conventional system of political funding is to rely on donations. These donations, big or small, come from a range of sources from political workers, sympathisers, small business people and even large industrialists. The conventional practice of funding the political system was to take donations in cash and undertake these expenditures in cash. The sources are anonymous or pseudonymous. The quantum of money was never disclosed. The present system ensures unclean money coming from unidentifiable sources. It is a wholly non-transparent system. The effort, therefore, is to run down any alternative system which is devised to cleanse up the political funding mechanism.
The scheme of electoral bonds to enable clean money and substantial transparency being brought into the system of political funding was announced in the Budget Speech for the year 2017-18.
As per the scheme, the entire transactions would be through banking instruments. As against a total non-transparency in the present system of cash donations where the donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed, some element of transparency would be introduced in as much as all donors declare in their accounts the amount of bonds that they have purchased and all parties declare the quantum of bonds that they have received. How much each donor has distributed to a political party would be known only to the donor.
Important Features of Electoral Bond Scheme:
- Electoral Bonds will not bear the name of the donor.
- Electoral Bonds will be issued in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 crore.
- A donor can purchase electoral bonds from a specified bank only by a banking instrument.
- He would have to disclose in his accounts the amount of political bonds that he has purchased.
- They can be bought by the donor with a KYC-compliant account.
- The life of the bond would be only 15 days.
- Donors can donate the bonds to their party of choice.
- 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 as specified by the Central Government.
- An additional period of 30 days shall be specified by the Central Government in the year of Lok Sabha elections.
- Donations would be tax deductible. A donor will get a deduction and the recipient, or the political party, will get tax exemption, provided returns are filed by the political party.
- Every political party in its returns will have to disclose the amount of donations it has received through electoral bonds to the Election Commission.
- Every party that is registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has secured at least one per cent of the votes polled in the most recent Lok Sabha or State elections will be allotted a verified account by the Election Commission of India. Electoral bond transactions can be made only via this account.
Leave a Reply