What’s in News?
- Supreme Court of India will not put a stay on the issue of Electoral Bonds, says CJI.
- For upcoming Delhi Legislative Assembly Elections (February 2020), a decision on Electoral Bonds is vital.
What are Electoral Bonds?
- Electoral bonds are promissory notes, which may be purchased by a person, who is a citizen of India or incorporated or established in India.
- They can be purchased from select branches of SBI (State Bank of India).
- The citizen or corporate can then donate the same to any eligible political party of his/her choice
- They are free of interest.
- They are bearer bonds (the holder of the instrument becomes the owner of the same). Since the electoral bonds will not bear the name of the donor (similar to currency notes), the political party might not be aware of the donor's identity (it is kept anonymous).
- The receiver can encash the bonds only through the party's verified account in an authorized bank. The electoral bond will be valid only for fifteen days.
Why electoral bonds were introduced in India?
- According to the government, electoral bonds were being introduced to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public.
- Electoral bonds would keep a tab on the use of black money for funding elections. In the absence of electoral bonds, donors would have no option but to donate by cash after siphoning off money from their businesses
When are the bonds available for purchase?
- The electoral bonds are available for purchase for 10 days in the beginning of every quarter.
- The first 10 days of January, April, July and October has been specified by the government for purchase of electoral bonds. An additional period of 30 days shall be specified by the government in the year of Lok Sabha elections
How will a party receive money through such bonds?
- Only political parties registered under Section 29A of the Representation of the People Act, 1951 (ROPA) and which secured not less than 1% of votes polled in the last general election to the House of the People or the Legislative Assembly of the State, are eligible to receive electoral bonds.
- The party will be allotted a verified account by the Election Commission of India (ECI) and the electoral bond transactions can be made only through this account
- The political party will get tax exemption, provided returns are filed by the political party.
- Parties need to provide complete information to the ECI, in sealed covers, on every donor, amount and credit received against such bonds.
Restrictions that were done away with after the introduction of the electoral bond scheme
- Earlier, no foreign company could donate to any political party under the Companies Act
- A firm could donate a maximum of 7.5 per cent of its average three year net profit as political donations according to Section 182 of the Companies Act
- As per the same section of the Act, companies had to disclose details of their political donations in their annual statement of accounts.
The government moved an amendment in the Finance Bill to ensure that this proviso would not be applicable to companies in case of electoral bonds.
Thus, Indian, foreign and even shell companies can now donate to political parties without having to inform anyone of the contribution
Benefits of Electoral bonds:
- Centre and States - Earlier, it was envisioned that the EBS will be used only for the Lok Sabha General Elections, but now they are likely to be used in the upcoming Delhi election as well.
- Donors and recipients-In February 2017, the then finance minister said that the donations would be tax-deductible. Hence, a donor will get a deduction and the recipient, or the political party, will get tax exemption.
- Cashless Economy-All the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public. This would keep a tab on the use of black money for funding elections.
Opposition to Electoral Bonds:
- RBI and ECI (Election Commission of India) have strongly objected to the Electoral Bond Scheme (EBS). This is on account of lack of transparency because they legalise the anonymity of donors. So, general citizens who will not know who is donating to which party, which hampers the Right to Information, a fundamental right.
- EBS opened the floodgates of unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies and it can have serious repercussions on democracy in the country.
- According to civil rights societies, the concept of donor "anonymity" threatens the very spirit of democracy.
- It can be used to channelise black money in favour of the ruling party.
- The ECI stated that major part of contributions through EBS has accrued to the ruling party.
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