Electoral bond is a form of donation to a political party by Indian citizens or companies in India. They take the form of promissory notes and are I ssued only by the State Bank of India. Brought in as a reform measure, the opaque process has raised questions.
Advantages of Electoral Bonds
- Check black money donation- political parties disclose electoral bond donations to be the Election Commission.
- Transparency- KYC pre-requisite makes it more transparent than cash. According to ADR, 69% political funding comes from unknown resources.
- Protection against intimidation- The provision of anonymity helps protect against any muscle-power and harassment by opponents.
- Tax advantage- Makes it an attractive tool for political donations.
Efficacy of Electoral Bonds
- Voter’s Right to Information- electoral bonds, remove transparency and accountability in political funding does hiding any influence of businesses on policies.
- Asymmetrical Opacity- the ruling party has an upper hand in terms the information of funding the electoral bonds are purchased through government owned SBI.
- Elimination of upper limit on spending- can you give birth to shell companies and hamper the good intent of the policy.
Way Forward
- Policy measures to curb corruption-
- A donation cap on companies
- Disclosure of donations above a certain threshold (RPA, 1951)
- Awareness campaigns – Right to information needs to be staying there for the voters to make an informed choice.
- Plugging loopholes- independent arbitrator to look into electoral bond disputes
Intended as a reform for transparency, electoral bonds have not effectively curbed corruption. Increased transparency and accountability of political financing is necessary for effective functioning of democracy.
The Electoral Bond scheme and its impact on the existing transparency within Indian politics based on the information present here and your additional comments.
Electoral Bonds: A Contested Reform
Electoral Bond Scheme was brought in the light of reducing black money in the funding of political parties. Despite the above benefits it still raises controversy in relation to the effect in the area of transparency and accountability.
Advantages:
-Replacement of Cash Contribution: In theory, this is done by replacing cash contributions with instrument based dues, which can be presumed that other unidentified cash inflows into political funding.
-Anonymity of the Donor: The program allegedly safeguard the donors from possible harassment as well as intimidation.
-Immunity of Taxes: Donations relating to electoral bonds are exempt from taxes and this may extend more individuals and firms in giving.
-Opacity in Funding Sources: It remains quite questionable simply because the source of funds for electoral bonds has not been disclosed at all. It can accept without revealing the identities of the donors or their sources may be local or even foreign.
-Influence of Corporate Interests: The scheme can permit huge amount of corporate donations and has been criticized as allowing large corporate interests to buy influence over the parties.
-Asymmetric Information: This is so because the ruling party has information over the opposition parties in regards to the buying of bonds.
-Potential for Misuse: The major problem that may arise from the current situation is the misusing and corruption which is caused by the absence of transparency and no upper limit of donation amount.
To increase the transparency and accountability in political funding, the following measures can be considered:
-Company-level Donation Cap: Place a check on the amount that a corporation can contribute through electoral bonds.
-Disclosure Threshold: Call for disclosure of all monand donations that exceed a specified limit with a view of achieving this goal.
-Independent Review Mechanism: An autonomous entity that is involved in the matters of transactions that involve electoral bonds or any other dispute regarding the same.
Public Awareness Campaigns: Voter awareness of the undisclosed sources of funds and the necessity of effectiveness of political financing.