Examine the key provisions of Electoral Bond Scheme. To what extent is it committed to maintain transparency in political funding? Argue. []

Electoral bond scheme was announced by Finance Minister Arun Jaitley in budget 2017 as an instrument to cleanse the electoral funding. Since inception, election financing is done by anonymous cash donations. Electoral bonds are the best approach to break the anonymity. Key provisions of the scheme are,

  • Electoral bonds can be purchased from specified SBI branches in the months of January, April, July and October (10 days sale window each month). In  the year of general elections, the bonds can be purchased for 30 days instead of 10 days.
  • The bonds can be purchased only by a citizen of India or any body incorporated in India.
  • It is mandatory to fulfil the KYC norms while purchasing and the purchase to be done via a KYC compliant bank account and not cash. Thus, the donor details automatically gets registered with the bank.
  • The purchase of electoral bonds will reflect in their respective balance sheet.
  • Even though KYC norms are to be fulfilled for purchase of the bonds, they will not bear the details of the donor. Thus the political party will still remain unaware of the donors particulars.
  • Political parties which have secured not less that 1% of the votes polled in the last general election to lok sabha or assembly elections are eligible to accept such electoral bonds as funds. 
  • The political parties can redeem these bonds only through a designated bank account details of which are notified to the election commission .   
  • Nature of electoral bond would be like that of a promissory note with a validity of 15 days. That is, the bond do not attract any interest.
  • Denominations available: The bonds can be bought for any value, in multiples of Rs.1000, Rs.10,000, Rs. 1 lakh, Rs. 10 lakhs and Rs. 1 crore.

Electoral bonds will ensure flow of cleaner money into political parties as against the current flow of black currency. This scheme also significantly enhances the transparency of donations made to the political parties. 

Question for UPSC Mains:
Examine the key provisions of Electoral Bond Scheme. To what extent is it committed to maintain transparency in political funding? Argue. [GKToday | THBL]

Published: January 4, 2018 | Modified:September 21, 2019

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