Electoral Bonds scheme which was first mooted in 2017-2018 budget and notified on 1st of January, 2018 is one of the most important steps among a series of measures taken by the Narendra Modi government to clean up the electoral funding system in India.
Opposition parties who were used to the earlier shady, unaccountable system of funding are now opposing this radical measure by the government to usher in a transparent system. Just like how a few opposition parties had propped up fake claims and lies to prop up their now busted “EVMs can be hacked” theory, the same method is also now being used by them to discredit this progressive scheme too.
So, let us now uncover the actual facts behind the electoral bonds scheme and how it is an improvement over the earlier opaque system.
Political Donations- The Imperfect Past
While the previous system of funding and contribution to political parties can best be described as one specifically designed in such a way to encourage dishonest practices, electoral bonds are structured to encourage clean money from known sources to fund our political parties. This clean method could be making few opposition parties tense as they’re not used to operating in a transparent way.
The earlier system had three main factors which encourages dishonesty and scuttled accountability-
- Political parties had to report only contribution above Rs 20,000 to the Election Commission.
- Any donation below this amount can be donated anonymously
- Identity of donors mattered only above Rs 20,000 since, then, there was some paperwork involved
As you can clearly see these three factors laid the groundwork for parties to be opaque about their funding.
Most of their funding received was engineered to be below Rs 20,000 so that neither the quantum nor the source of money obtained by the political parties were known to the public. There was also no audit trial for the funding received since maximum funding the parties used to get was through physical cash.
Since contributions above Rs 20,000 need to be revealed too, it discouraged donors from using traceable methods of contributions like cheques for the fear of harassment and they were forced to resort to cash contributions.
Thus, the old system encouraged the infusion of large amount of black money into the political parties and parties themselves could became a vehicle for money laundering!
Transparency through Electoral Bonds
Most shortcomings and loopholes in the previous opaque system have been addressed by the electoral bond scheme, making it a transparent, accountable and safe way to donate
- Every political party has to open a designated bank account specifically for receiving the contributions from the bonds, hence the quantum of money the political parties receive will now be available for record
- Every donor also has to fill in Know Your Customer (KYC) norms before buying the bond from the designated bank. This ensures not only the source of funding is available but also ensures clean tax paid white money is encouraged to fund the political parties
- Donors can only purchase the bonds using cheques or online banking, thus eliminating the use of physical cash
- The bonds which are now purchased using clean money in transparent method offer anonymity to the donor, and thus, there is no fear of future harassment that they have to face for making political contributions
- Since electoral bonds are sold only at specific branches of SBI at 4 windows throughout the year and have to be encashed within 15 days of being brought, shell companies cannot be used to contribute to political parties and thus these instruments cannot be traded or used as proxy currency
- A serial number put on the bond using invisible ink ensures that data of both donor and political party is available to income tax authorities and other law enforcement agencies for investigation purpose
- The political parties now have to make accounting entries in their book for the electoral bonds received, hence there is an audit trail also available.
The elaborate checks and balances being built into the electoral bond scheme has ensured that clean money flows into the system. So far Rs 6,129 crores of such money has flowed into different political parties in twelve tranches/windows.
The Other Objections on Electoral Bond
There were some media reports that tried to portray the government decision on electoral bonds as some kind of scandal that involved an arm-twisting of agencies by the government. Kartikeya Tanna, a legal professional in his tweets and article, has called the bluff of all such arguments. The claims and the factual circumstances are evident in the below tweets.
Part 1 mentions, without any proof whatsoever “Foreign companies could not donate to Indian political parties at all. Foreign companies can also now route money to Indian political parties”
— Kartikeya Tanna (@KartikeyaTanna) November 22, 2019
Today’s @HuffPostIndia “expose” that sent the echo chamber in a haze is, believe it or not, how government made a one-time exception when a political party thought the words “15 days” in the Electoral Bonds Scheme meant “15 business days”. More here: https://t.co/bl7gbOUYMS 6/n
— Kartikeya Tanna (@KartikeyaTanna) November 22, 2019
Further, in his article on FirstPost, Kartikeya Tanna argues that the Election Commission sticking to its reservations on electoral bonds itself indicate that the government is not forcing any agency to toe its line. He writes:
“The EC continues to oppose the electoral bond scheme as evident in an affidavit it filed in the ongoing Supreme Court case on validity of the bond scheme (thereby demonstrating the fact that Modi government has not arm-twisted another agency of the Executive) whereas the RBI, after its initial objection, offered suggestions on making the process as close to the twin goals as possible.”
Explaining the significance of the provision that keeps the donor’s name anonymous, the writer gives an example:
Citing illustrations in the United States of how both Republican and Democrat parties have abused their power to intimidate those who donated to the other, Bradley A Smith, former US Federal Election Commission chairman writes in a piece coincidentally titled In Defense of Political Anonymity that “disclosure has resulted in government-enabled invasions of privacy — and sometimes outright harassment — and it has added to a political climate in which candidates are judged by their funders rather than their ideas”.
In any case, electoral bonds are a vast improvement over the earlier, opaque and black money ridden political funding system. To attack electoral bonds while favouring a return to the older system is not an intellectually honest argument.
Meanwhile, do the Congress and its friends have a problem with electoral bonds because black money sources have been cut off from their funding?