An extraordinary announcement was made in the Union Budget this year to ensure transparency in political funding by introducing electoral bonds for which the Government is gearing up to amend the rules of Reserve Bank of India. The proposal has found favour generally but the plan is seen as yet another attempt by the Government to step on the turf of the RBI.
- Electoral Bond is a financial instrument for making donations to political parties. These are issued by Scheduled Commercial banks upon authorisation from the Central Government to intending donors, but only against cheque and digital payments (it cannot be purchased by paying cash). These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.
- The electoral bonds which will be issued by notified banks can be redeemed by recognised political parties within a prescribed time limit.
Electoral Bonds | Highlights
- Apart from accepting the demands of the Election Commission to reduce cash donations limit from Rs. 20,000/- to Rs. 2,000/-, the Government has moved towards a new innovative idea of electoral bonds. Hence, Electoral bonds are more to do with eliminating black money and less to do with electoral reforms.
- These will be short duration bonds which means that they will have to be encashed within a period of 30 or 45 days as suggested by the Finance Minister.
- The identity of the donor will not be disclosed if there is use of electoral bond which in case of cheque payment gets fully disclosed showing which companies and industrial houses are supporting a particular political party even if the funding is legitimate.
- There is no limitation on giving cash to the political parties. At present also, the amount being paid as donation is shown less than the amount being actually given to the political parties. Since the money will come through banks, so to some extent black money will be reduced. But as far as corruption is concerned, it is still difficult to put a check with this step.
- In order to bring electoral bonds, RBI Act will have to be amended because right now under the law only RBI can issue these bonds. After this the banks designated by RBI to issue these bonds will come into picture.
Electoral Bonds | Criticism
- The scheme is left at the discretion of political parties or companies which means that it does not really addresses the issue of political funding. There is nothing in the scheme that will encourage the companies or industrial houses to buy these bonds by payment of cheques and political parties to take those bonds.
- Few experts are questioning the proposal on the grounds that this step would further decrease the sanctity of an autonomous institution like the RBI as the issuance of bonds is the domain of the central bank.
Electoral Bonds | Suggestions for improvement
- When the country is moving towards digitization, even the Rs.2000 which can be paid in cash to the political parties should be paid online.
- If all the transactions and accounts being done and used by political parties are regulated under a piece of legislation, it might prove to be more effective and simple.
- There are many political parties at present which do not file the return every year. The law can be amended to enforce strict actions against such political parties.
- Setting aside the election of such candidates against whom there are evidences of spending black money or excluding them from future elections as penalty can be a strong measure.
- Voters have to be made aware through awareness campaigns as often illiterate voters are bribed for votes before elections.
- If the Government is aiming towards a transparent political funding system, it can explore the idea of Government funding which can be a better tool to curb corruption as followed in many countries of the world. However, in country like India, this might lead to further problems when already Government has expenditures on other serious issues like poverty, unemployment etc.