Electoral Bonds Part II

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What is the issue?

The Government is set to introduce a scheme offering political bonds as bearer instruments which will conceal the identity of the bond buyers and enable a process of political donations that will make funding political parties transparent.

Electoral Bond:

• 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 (cannot be purchased by cash).
• These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.
• Electoral bond was announced in the Union Budget 2017-18.

What is the problem with the electoral bonds?

• Electoral bonds as envisaged here open up yet another route to further the unholy nexus between corporate houses and political parties, which have been at the root of high level corruption in the country.
• Consider a situation: A large corporate, ‘A’, plans to donate a very large sum to a party, ‘B’, in power but wants no attention from regulators, anti-corruption laws or the judiciary.
• The Government enacts a law that blacks out the identity of the donor ‘A’. Neither ‘A’, the donor, nor ‘B’, the receiver, is required to share details of the so-called donation.
• This comes within the realm of possibility, indeed probability, with no upper limit set of the donations that can be made by a donor entity.
• The scheme says nothing about the kind of nexus that will drive such donations.

Could it promote transparency?

• It is true that businesses and their associations and federations do not want the donors named but then the transparency of a system cannot be achieved when donations have no upper limits and names of groups making the payment are blacked out.
• To enforce transparency in political funding: We need to ban cash altogether and disclose all sources. 
• The only message we can draw is that political will is singularly lacking to cleanse the system.

Source: Business Line