What is the Electoral Bond Scheme?
- The Scheme was announced in the Union Budget of 2017.
- Electoral Bonds are interest-free bearer instruments, which are used to donate money to political parties, anonymously.
- The specialty of a bearer instrument is that it does not carry any information about the buyer and the holder of the instrument (in this case, the political party) is presumed to be its owner.
- The bonds are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, and the only authorized bank that can sell them is the State Bank of India (SBI).
- The party could encash the bond within 15 days through its verified account.
- No upper limit has been imposed on the number of bonds an individual or company can purchase.
- Donation can be made by:
- Foreign Nationals
- Individuals or groups of individuals
- NGOs, religious and other trusts
Increasing Popularity of the Scheme
- According to the Government, electoral bonds will help them in preventing the flow of black money into elections.
- Electoral bonds have become the dominant method for funding political parties in India, in the last three years.
- According to an analysis by ADR, more than half the total income of national parties and the regional parties for the financial year 2018-19 came from electoral bonds donations.
- The biggest beneficiary of this scheme has turned out to be the Bharatiya Janata Party (BJP).
Stand of Election Commission on the Scheme
- The Election Commission has opposed the exemption of political parties from disclosing the donation received by them.
- In a letter to the Law Commission, it has asked the Government to ‘reconsider’ and ‘modify’ the above amendment.
Stand of RBI on the Scheme
- According to RBI, such a scheme has no precedent in the world.
- RBI has highlighted that the scheme can help in money laundering. According to RBI, the bonds can be misused and could lead to more black money.
- Rbi also feared that it would make political funding opaque.