The concept of electoral bonds has been proposed as a way of reforming election funding. Are there any loopholes in this concept? Critically discuss while suggesting ways to plug those loopholes or alternative ways to clean electoral funding.
Electoral Bond is a financial instrument for making donations to political parties. These are issued by Scheduled Commercial banks upon authorization from the Central Government to intending donors, but only against cheque and digital payments (it cannot be purchased by paying cash). These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.
Loopholes in electoral bond:
- The Electoral bonds will act as a conduit for clandestine corporate funding as the details of the donor shall be kept confidential by the banks. Name of the donor will not be made available to the Election Commission, nor will they be mentioned in the accounts submitted by the political party to the Income Tax Department.
- These money may be “white” but will make the whole transaction totally opaque. The public will never know who contributed the money, hence there shall be no transparency.
Alternative ways to clean electoral funding:
- Former Chief Election Commissioner, TS Krishnamurthy suggested that the EC should consider setting up of a national election fund to check the use of illegal money, instead of introducing bonds. All corporate who donate to this fund could get a 100% tax waiver.
- A similar suggestion of state funding of elections to ensure a level playing field was made by the Indrajit Gupta Committee in 1998.
- Cash contributions to political parties should be completely scrapped. This will not only curb the misuse of the Rs.2,000 cash limit but also will give a push towards digital India.
- Bringing all the political parties under the Right to Information Act as public authorities
Transparency in political financing will happen when the political establishment realizes that the only way to get out of the shackles of big and black money is to become open to scrutiny.