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NEW DELHI: Electoral bonds in India are a unique mechanism introduced by the government to facilitate transparent funding of political parties. Essentially, electoral bonds are financial instruments that allow individuals and organizations to donate money to political parties without revealing their identities to the public or the recipient party.
Introduced in 2017, electoral bonds were hailed by the government as a means to promote transparency by channeling donations through banking channels.However, critics raised serious concerns about the anonymity they provided to donors and the potential for corruption.
Under the electoral bond scheme, individuals and corporate groups could donate unlimited amounts of money to political parties anonymously. These bonds, issued in the form of promissory notes, did not require the disclosure of the donor’s identity to anyone, including the Election Commission of India (ECI).
The recent ruling by the Supreme Court follows revelations from official data released by the EC on March 15, showing that some of the country’s biggest companies were among the top political funders over the last five years under the now-scrapped political funding system.
Here’s how electoral bonds work:
Issuance: Electoral bonds are issued by authorized banks at specific intervals, typically a few times a year. These bonds are available in fixed denominations ranging from as low as Rs 1,000 to as high as Rs 1 crore or more.
Purchase: Any eligible individual or entity, including companies and registered political parties, can purchase electoral bonds from designated branches of authorized banks. These bonds can be bought either through digital channels or by visiting the bank in person.
Donation: Once purchased, the electoral bonds can be donated to registered political parties of the donor’s choice. These bonds serve as a legal mode of making political contributions.
Redemption: Political parties can encash the electoral bonds within a specified period, typically within 15 days of issuance. The funds received through electoral bonds are credited to the party’s designated bank account, which is monitored by the Election Commission of India (ECI).
Now, let’s explore the rationale behind the introduction of electoral bonds and their intended benefits:
Transparency: Electoral bonds were introduced with the aim of enhancing transparency in political funding. By routing donations through bonds, the identities of individual donors remain anonymous, but the transactions are recorded by the issuing banks and monitored by regulatory authorities.
Legal framework: Electoral bonds provide a legal framework for making political donations, thereby reducing the reliance on cash contributions, which are often associated with opacity and potential misuse.
Accountability: Political parties are required to disclose the funds received through electoral bonds in their financial statements submitted to the ECI. This promotes accountability and enables greater scrutiny of party finances.
Encouraging formal economy: Electoral bonds encourage donations through formal banking channels, thereby promoting transparency and accountability in financial transactions related to political funding.
However, electoral bonds have also faced criticism and scrutiny from various quarters:
Anonymity: Critics argue that the anonymity of donors undermines transparency and accountability in political funding, as it allows for potential influence peddling without public scrutiny.
Lack of disclosure: While political parties are required to disclose the total amount of funds received through electoral bonds, they are not obligated to reveal the identities of individual donors. This opacity has raised concerns about the potential for quid pro quo arrangements between donors and political parties.
Potential for misuse: Despite the legal framework governing electoral bonds, there are concerns about the possibility of misuse or circumvention of regulations, particularly in the absence of stringent enforcement mechanisms.
Introduced in 2017, electoral bonds were hailed by the government as a means to promote transparency by channeling donations through banking channels.However, critics raised serious concerns about the anonymity they provided to donors and the potential for corruption.
Under the electoral bond scheme, individuals and corporate groups could donate unlimited amounts of money to political parties anonymously. These bonds, issued in the form of promissory notes, did not require the disclosure of the donor’s identity to anyone, including the Election Commission of India (ECI).
The recent ruling by the Supreme Court follows revelations from official data released by the EC on March 15, showing that some of the country’s biggest companies were among the top political funders over the last five years under the now-scrapped political funding system.
Here’s how electoral bonds work:
Issuance: Electoral bonds are issued by authorized banks at specific intervals, typically a few times a year. These bonds are available in fixed denominations ranging from as low as Rs 1,000 to as high as Rs 1 crore or more.
Purchase: Any eligible individual or entity, including companies and registered political parties, can purchase electoral bonds from designated branches of authorized banks. These bonds can be bought either through digital channels or by visiting the bank in person.
Donation: Once purchased, the electoral bonds can be donated to registered political parties of the donor’s choice. These bonds serve as a legal mode of making political contributions.
Redemption: Political parties can encash the electoral bonds within a specified period, typically within 15 days of issuance. The funds received through electoral bonds are credited to the party’s designated bank account, which is monitored by the Election Commission of India (ECI).
Now, let’s explore the rationale behind the introduction of electoral bonds and their intended benefits:
Transparency: Electoral bonds were introduced with the aim of enhancing transparency in political funding. By routing donations through bonds, the identities of individual donors remain anonymous, but the transactions are recorded by the issuing banks and monitored by regulatory authorities.
Legal framework: Electoral bonds provide a legal framework for making political donations, thereby reducing the reliance on cash contributions, which are often associated with opacity and potential misuse.
Accountability: Political parties are required to disclose the funds received through electoral bonds in their financial statements submitted to the ECI. This promotes accountability and enables greater scrutiny of party finances.
Encouraging formal economy: Electoral bonds encourage donations through formal banking channels, thereby promoting transparency and accountability in financial transactions related to political funding.
However, electoral bonds have also faced criticism and scrutiny from various quarters:
Anonymity: Critics argue that the anonymity of donors undermines transparency and accountability in political funding, as it allows for potential influence peddling without public scrutiny.
Lack of disclosure: While political parties are required to disclose the total amount of funds received through electoral bonds, they are not obligated to reveal the identities of individual donors. This opacity has raised concerns about the potential for quid pro quo arrangements between donors and political parties.
Potential for misuse: Despite the legal framework governing electoral bonds, there are concerns about the possibility of misuse or circumvention of regulations, particularly in the absence of stringent enforcement mechanisms.
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