Electoral Bonds : The Current Scenario in Connection to Elections

Electoral Bonds is an instrument to fund political parties for their purposes through individuals and corporations. They can be purchased from the State Bank of India in denominations of 1000 Rs, 10000 Rs, 100000 Rs, 1000000 Rs and 1 Crore Rs as well. These can be purchased via a KYC  linked account but the best part about them is their anonymity. The donor of the money is always anonymous and the political parties have to encash them within a stipulated time period. In other words this is a scheme wherein the political parties can accumulate funds which can be used for any purpose and the identity of the donor is also anonymous in it.

The Inception of Electoral Bonds

Electoral bonds were brought into effect in 2017 after making amendments into 4 laws altogether namely Finance Acts 2016 and 2017, FCRA 2010, Income Tax Act 1961 and RPA 1951. This was introduced through the Financial Act 2016-17. The fundings received by the political parties before were capped to a 20000 Rs for an individual and for the corporations the donation cannot be more than 7.5% of their net profit or 10% of their revenue. However all these were abolished by the introduction of electoral bonds.

How Does the Electoral Bonds Work ?

It is very simple. The \electoral bonds are available with the State Bank of India. The corporations or individuals can purchase these bonds from the State bank of India and note a contribution into the political parties campaigns and works anonymously. The political parties have to encash the bonds within a timeframe or else they would be directed to the Prime Minister Relief Fund. The name of the donor is not necessary to be disclosed here and there is no cap limit on the amount of electoral bonds an individual or corporation could buy. Hence this is a very simple way for the political parties to fund their works.

Recent Scenario

A five judge bench in the Supreme Court scrapped the seven year long standing electoral bond scheme recently. The Court also instructed RBI to disclose the names of donors to the ECI in recent updates. This is a decision that came into effect in february just a few months before the election procedure pushes off. This is said to be a way to block multiple wrongdoings that have been done in the name of the Electoral bonds. 

The Cons of Electoral Bonds

Electoral Bonds can be used by the political parties for any purposes if they want to start a business or make an office or fund their campaigns etc. These funds can be used by them in any manner without any restrictions or disclosures. Hence this a straight way for the corporations to influence the government decisions in their favour. In the case there was a reference to the vedanta company wherein they are said to be associated with a huge donation to the electoral bonds of the ruling party and on the other hand they received multiple mining projects. Hence this can become a direct route of influencing the decision in the favour of the ones who donate to the political party in power. 

On the other hand the limit set on donations was 7.5% before which was uplifted in this mode. This can give  a way out to the corporations to donate the most to the ruling parties to influence decisions in their favour and also the political parties can indulge into corruption through this money route. Alos multiple shell companies with no business as well can be formed just to donate to the electoral bonds even if they are not showing any profits or business or constantly incurring losses.

Hence this is not entirely an opaque mode of making donations as the corporations or individuals can bend the policy decisions into their favour by tipping off the political parties with the money they need for their campaign and political party purpose.

Other Information

It was also noticed by more than 50% of this money was received by the ruling party in centre and the rest by the ruling party in states. Not even a percent of these findings have gone to the opposition party. Hence this is a clear rute of corruption or just a direct route for funding the works of the parties to influence the decisions by the government. 

Also the recent scrapping of the decision is a bit late as the political parties have already done their work for the term and are now heading close to the result day. Hoover this can stop the circulation of money in the system to influence votes at par. However the electoral bonds are not even a strong instrument to stop the circulation of black money as there is no limit in the deposits that can be made by the individuals or corporations.