The Electoral Bonds scheme, notified by the Union Government on January 2, is a clever step towards emaciating the opposition parties. Neither will it lead to greater transparency in the funding of political parties (as claimed by Finance Minister Arun Jaitley) nor will it check the flow of black money into the electoral process. Even Election Commission has expressed apprehensions at the move. The scheme was mischievously included in the 2017-2018 budget proposals.
According to the notification, only the State Bank of India (SBI) can issue the Electoral Bonds in the denominations of Rs 1000, Rs 10,000, Rs one lakh, Rs ten lakh and Rs one crore. A total of 53 branches of SBI have been authorised to sell the Bonds – one branch in the capitals of all the States and Union Territories – more than one branch in some States. An individual or body can purchase these Bonds from the designated branches after fulfilling the KYC (Know Your Customer) requirements. However, the Bonds will not carry the name of the purchaser.
The byer can donate these Bonds to a political party which is registered with the Election Commission and has received not less than one per cent of the votes in the last Lok Sabha or Assembly election. The party can encash the Bonds only by depositing these in its bank, registered with Election Commission, within 15 days after the issuance of the Bond. If not deposited within 15 days, the amount of the Bond will go to the Prime Minister’s Relief Fund.
Jaitley told Lok Sabha on January 2 that ‘the element of transparency is that the balance sheet of donors will reflect that they have bought a certain amount of Bonds and political parties will also file their returns (with the Election Commission) that will reflect the extent of Electoral Bonds received.’ The Finance Minister also said that ‘political funding needs to be cleansed up. A very large part of donation coming to political parties by the donors, quantum and source is not known…. Electoral Bonds (will) substantially cleanse the system.’
Election Commission had expressed the apprehension that abolition of relevant provisions of the Companies Act of removing a cap of 7.5 per cent of profit for political donations can lead to money laundering by setting up of shell companies for diverting funds for donations to political parties.
The Election Commission was not amused when Jaitley had announced the Electoral Bonds scheme in his budget proposals. Its objection mainly was that it might lead to the use of black money in electoral politics. In his keynote address at a conference of Association for Democratic Reforms (ADR) some time back, Election Commissioner O P Rawat observed that ‘the recent amendments in the election and income tax laws make it clear that any donation received by a political party through an Electoral Bond has been taken out of the ambit of reporting in the Contribution Report which political parties have to submit to the EC. Implications of this step can be retrograde as far as transparency is concerned. Furthermore, where contributions received through Electoral Bonds are not reported, a perusal of contributions reports will not make it clear whether the party in question has taken any donations in violation of Section 298 of the Representation of the People Act, which prohibits political parties from taking donations from Government companies and foreign sources.’
Election Commission had expressed the apprehension that abolition of relevant provisions of the Companies Act of removing a cap of 7.5 per cent of profit for political donations can lead to money laundering by setting up of shell companies for diverting funds for donations to political parties.
The January 2 notification says: ‘the information furnished by the buyer (of Electoral Bonds) shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of a criminal case by any law enforcement agency.’
That, of course, is the official position. Unofficially, the SBI is all but part of Finance Ministry. In the corruption-ridden system that we have, an unscrupulous Finance Minister can always get the information as to who purchased Electoral Bonds of what amounts and to which parties’ accounts have these been credited. Next is carrots and sticks approach.
