| Introduction: Write the features of the electoral bond scheme Body: Write the intended benefits and issues associated with the scheme Conclusion: write suggestion in brief to tackle issues |
Electoral bond is a financial instrument used to make donations to political parties. The electoral bond scheme was launched in the year 2018.
Any individual who is Indian citizen, corporate or other institution, based in India, can purchase electoral bonds. There is no cap on the maximum amount that can be donated to a party. SBI is authorized to issue and en-cash these bonds. Only, registered political party, which has secured at least 1% of votes polled in the previous election, are eligible under the scheme.
Intended benefits of the scheme:
- Countering the menace of black money in electoral Funding, as all transactions are done through the banking system and KYC norms are followed.
- Anonymity ensures protection of donor from any adverse actions from other political parties.
- Opens new avenues for funding of political parties, which are essential for functioning of democracy.
- Better than cash donations as it is more transparent medium of donation.
However, scheme has not been successful in ensuring transparency and building trust of the vote in the election process of India.
Issues associated with the scheme
- Anonymity: Neither the donor nor the political party is obligated to disclose information regarding donations under the scheme, which creates opacity in the system. The voter lacks information to make an informed choice in elections.
- Lack of transparency: Election commission has raised concerns over the lack of transparency in the funding of political parties.
- Asymmetry in access to information as the political party in power can get information from SBI regarding donations.
- Crony capitalism: Potential for unholy Corporate – political nexus, as cap on corporate donation of 7.5% on of net profit in preceding 3 years has been removed.
- Use of black money: Creates potential of black money in political funding through shell companies.
- With the removal of cap on foreign funding, it creates potential for foreign corporates to influence Indian politics.
- RBI raised concerns over creation of a parallel monetary system, as the bonds have features of currency notes.
Electoral bonds have benefits over cash in cleaning up electoral funding but there several issues that needs to be addressed to ensure free and fair election process that is a basic feature of a vibrant and functioning democracy,
