In Feb 2017 budget speech, Finance Minister Arun Jaitley stated two profound statements. One, without transparency in political funding, free and fair elections are not possible. Second, that despite 70 years of concern we have failed to bring transparency. Electoral bonds were introduced with such profound statements and claims. But it seems like it has also failed at its purpose. As we go further, first we need to understand:
What are Electoral Bonds?
Electoral bonds are interest-free bearer instruments used to donate money anonymously to political parties. These are sold in the multiples of ₹1,000, ₹10,000, ₹1lakh, ₹10 lakh, and SBI (which is a PSU) is only authorized to sell them. There is no limit to how many bonds a donor can buy.
The major reasons which the government stated while introducing electoral bonds were, it will combat the menace of black and unaccounted money in politics and to maintain the secrecy of donors to save them from the wrath of political parties. Before electoral bonds were introduced donations of more than ₹20000 were reported to Election Commission with details of the donor but now donors can anonymously donate any amount to political parties. This has further opened ways for crony capitalism. Also, this anonymity feature of electoral bonds is not applicable for the ruling party which can ask SBI for details of donors. It might create fear among donors of opposition parties and can further stop them from donating which might hamper the ability of opposition parties to compete.
While introducing electoral bonds government also amended The Finance Act 2017, introduced an amendment in the RBI Act, Companies Act, Income Tax Act, Representation of People Act, Foreign Contribution Regulation Act (FCRA) to make way for electoral bonds.
There are few changes that are very controversial and do not depict the good intention of the government. First, earlier a company could only donate up to 7.5% of its profits, now this limit has been removed by amending section 182 of the Companies Act, 2013. Second, earlier such donations had to be declared in profit & loss account, now this has been removed through Finance Act, 2017. Third, prior permission of the board of directors was required before donation, now this has been removed. All of this has been done in the name of transparency. Also in March 2018, by amending FCRA, the 2010 government has allowed foreign funding to political parties.
All of this makes us doubt the intentions of our democratically elected government. It seems like instead of making the funding process to political parties more transparent, electoral bonds have even taken away existing transparency.
Recently, the Supreme Court refused to revoke the electoral bond scheme while hearing a plea by the Association for Democratic Reforms (ADR) seeking a stay on fresh sale of bond, while its petition challenging electoral bond is pending. Instead, SC raised the flag over misuse of money received which is equally important in an environment where practices like funding terror and violent protest, luring voters by liquor, short-term financial incentives, or buying elected representatives, etc… are very prevalent.
Even if SC could not revoke the scheme, it could have easily asked for a discloser of details of donors and recipients. This is one way forward that would have easily weakened crony capitalism. Another way forward can be government can set up an independent body to whom all the money can be donated and which further can transfer the amount to the account of political parties. This could reduce fear among donors.
Categories: Governance and Transparency