New Delhi: The Narendra Modi BJP government introduced electoral bonds in 2018, a scheme that allows individuals and companies to donate money to political parties anonymously. The scheme was announced by government to "cleanse the system of political funding in the country."
Electoral bonds are bearer instruments that can be purchased by any Indian citizen or body incorporated in India from specified branches of the State Bank of India (SBI) during designated periods of the year. These bonds can then be donated to eligible political parties registered under the Representation of the People Act, 1951. The bonds are valid for 15 days from the date of issue and can be encashed through the specified SBI branches.
Who Can Purchase Electoral Bonds?
Any Indian citizen or body incorporated in India can purchase electoral bonds. This includes individuals, companies, firms, societies, and trusts. However, foreign companies and individuals are not allowed to purchase electoral bonds.
Can A Company Earmark Its Entire Profit For Political Funding?
Before the electoral bonds scheme was launched, companies had a limit on how much they could donate to political parties. They could only give up to 7.5% of their average net profits of the last three years. But the Electoral Bond Scheme, 2018 scrapped this limit. Now, companies can give as much money as they want to political parties through electoral bonds.
Prior to 2018, such contributions were mandatory to be authorized by a board resolution and disclosed in the company’s profit and loss account but now this provision doesn't exist.
How Are Electoral Bonds Used To Fund Political Parties?
Once a company has purchased electoral bonds, it can donate them to any eligible political party registered under the Representation of the People Act, 1951. The political party can then encase the bonds through the specified SBI branches and use the proceeds to fund its activities.
Criticism Of The Electoral Bond
Critics say that the electoral bonds scheme, which was supposed to make election funding more transparent, has done just the opposite. They say that the electoral bonds are a secret weapon for the government to spy on its rivals.
The bonds are sold by a state-owned bank (SBI), which means the government can find out who is backing its opponents. Critics claim that this gives the government the power to either blackmail big businesses, or punish them for not supporting the ruling party, creating an uneven playing field for the elections.
