Criticisms of Electoral Bond Scheme (EBS) – India’s voters deserve a bond

Source: The post criticisms of EBS has been created, based on the article “India’s voters deserve a bond — of probity” published in “The Hindu” on 21st March 2024.

UPSC Syllabus Topic: GS Paper 2- Governance – Important aspects of governance, transparency and accountability.

News: This article discusses the Electoral Bond Scheme (EBS) in India, introduced to provide a transparent way of funding political parties. However, concerns have been raised about its effectiveness in preventing black money in politics and the confidentiality of donor identities. The Supreme Court is involved in determining the legality and transparency of the scheme.

For details information on EBS read here

Why was EBS introduced?

Objective of Eliminating Black Money: EBS was introduced with the goal to eliminate black money from political funding, as stated by the finance minister in his 2017-18 Budget Speech.

Lack of Transparency in Political Funding: The scheme aimed to address the issue of political parties relying heavily on anonymous cash donations, often less than ₹20,000, which didn’t require revealing the donor’s identity.

Intended to Cleanse Political System: The idea was to create a ‘clean’ channel for political contributions, moving away from anonymous cash donations and towards a more traceable and accountable system.

Shift from Cash to Bank Transactions: It’s aimed to enhance transparency in political funding by allowing contributions through bond purchases from the State Bank of India. This shift towards bank transactions was intended to make the process more traceable and accountable.

What are the criticisms of EBS?

Lack of Transparency: The anonymity of donors in the EBS prevents the public from knowing who funds political parties.

Questionable Source of Funds: Many bond purchasers seemed to have income disproportionate to their business, raising doubts about the legitimacy of their funds.

Legal and Ethical Concerns: The Supreme Court and the RBI questioned the EBS, especially its transparency, enforceability and traceability aspects.

For details information on Electoral Bonds Scheme Verdict read here

Potential for Misuse: The scheme’s confidentiality clause makes it nearly impossible to link bond purchasers with political parties, opening doors for undisclosed and questionable political donations.

Complicated Enforcement under Section 7(4): This section of the EBS makes it difficult to disclose buyer information, thereby hindering investigations and reducing accountability.

What is the role of the State Bank of India (SBI) in the EBS?

The State Bank of India (SBI) is responsible for issuing Electoral Bonds in the EBS. However, questions have arisen about SBI’s record-keeping, particularly whether it can link bond purchases to specific donors and recipients. This aspect has become crucial in discussions about the transparency and effectiveness of the EBS.

What should be done?

Parliamentary Oversight: Engage Parliament to develop more transparent and accountable funding methods, as the article suggests the legislative body holds the key to reform.

Public Awareness: Educate citizens about the importance of clean political funding to encourage demand for more transparent practices.

Judicial Review: Allow the judiciary to periodically review and suggest improvements to the scheme, ensuring it aligns with democratic principles and transparency standards.

For information on State Funding of Election read here

Question for practice:

Evaluate the effectiveness of India’s Electoral Bond Scheme in achieving its stated objectives and address the concerns raised regarding transparency, accountability, and the prevention of black money in political funding.