- Parliament and State Legislatures – structure, functioning, conduct of business, powers & privileges and issues arising out of these.
Electoral Bond Scheme
What to study?
For Prelims: Key features of Electoral Bonds and highlights of the scheme.
For Mains: Significance of the scheme, benefits and concerns associated.
Context: State Bank of India (SBI) has been authorized to issue and encash Electoral Bonds through its 29 Authorized Branches.
About Electoral bonds:
What are electoral bonds? Electoral bonds will allow donors to pay political parties using banks as an intermediary.
Key features: Although called a bond, the banking instrument resembling promissory notes will not carry any interest. The electoral bond, which will be a bearer instrument, will not carry the name of the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.
Eligibility: As per provisions of the Scheme, electoral bonds may be purchased by a citizen of India, or entities incorporated or established in India. A person being an individual can buy electoral bonds, either singly or jointly with other individuals. Only the registered Political Parties which have secured not less than one per cent of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.
Need: The electoral bonds are aimed at rooting out the current system of largely anonymous cash donations made to political parties which lead to the generation of black money in the economy.
How will the Bonds help?
- The previous system of cash donations from anonymous sources is wholly non-transparent. The donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed.
- According to government the system of Bonds will encourage political donations of clean money from individuals, companies, HUF, religious groups, charities, etc. After purchasing the bonds, these entities can hand them to political parties of their choice, which must redeem them within the prescribed time.
- Some element of transparency would be introduced in as much as all donors declare in their accounts the amount of bonds that they have purchased and all parties declare the quantum of bonds that they have received.
Mains Question: Critically examine the effectiveness of electoral bonds in ensuring transparent political funding and suggest alternatives?