Electoral
bonds will allow donors to pay political parties using banks as an
intermediary. Although called a bond, the banking instrument resembling
promissory notes will not carry any interest.
The
electoral bond, which will be a bearer instrument, will not carry the name of
the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000,
Rs 1 lakh, Rs 10 lakh or Rs 1 crore.
Rationale behind the electoral bonds:
1) Electoral bonds have been introduced
to promote transparency in funding and donation received by political parties.
2) The scheme envisages building a
transparent system of acquiring bonds with validated KYC and an audit trail. A
limited window and a very short maturity period would make misuse improbable.
3) The electoral bonds will prompt
donors to take the banking route to donate, with their identity captured by the
issuing authority. This will ensure transparency and accountability and is a
big step towards electoral reform.
Electoral bonds can distort democracy
due to:
1) The move could be misused, given
the lack of disclosure requirements for individuals purchasing electoral bonds.
2) Electoral bonds make electoral
funding even more opaque. It will bring more and more black money into the
political system. electoral bonds would cause a “serious impact” on
transparency in funding of political parties
3) With electoral bonds there can be
a legal channel for companies to round-trip their tax haven cash to a political
party. If this could be arranged, then a businessman could lobby for a change
in policy, and legally funnel a part of the profits accruing from this policy
change to the politician or party that brought it about.
4) The amendments would pump in black
money for political funding through shell companies and allow “unchecked
foreign funding of political parties in India which could lead to Indian
politics being influenced by foreign companies
Alternative mechanisms for electoral
funding:
1) According to Former Chief Election
Commissioner S.Y. Quraishi, an alternative worth exploring is a National
Electoral Fund to which all donors can contribute.
2) The funds would be allocated to
political parties in proportion to the votes they get. Not only would this
protect the identity of donors, it would also weed out black money from
political funding.
3) The total cost of MPLADS funding
for all MPs is nearly ₹4,000
crore every year, and scrapping the scheme even for one year in an MP’s
five-year term will be enough to bankroll state funding of Lok Sabha
candidates. This is a legalized way of allowing MPs and MLAs to shower money on
their constituencies at state expense.
4) Direct funding of candidates, who
will be reimbursed according to their final share of the votes cast.
It
is high time that State funding of political parties can be considered. The
Indrajit Gupta Committee on State Funding of Elections had endorsed partial
state funding of recognised political parties.