Electoral bonds: Governments need to clarify on a few matters urgently
Finance Minister Arun Jaitley, during his budget speech in February 2017, announced introduction of electoral bonds a way for political parties to find funding and cut black money and corruption.
Parliament is currently debating Finance Bill and is likely to approve electoral bonds as well. Jaitley said, "The government will amend several laws including those of the Reserve Bank of India (RBI) Act and Income Tax Act to enable political parties for raising funds via electoral bonds."
The Election Commission suggested that maximum cash donations to a political party should be capped at Rs 2000 as against Rs 20,000. Jaitley made an announcement to this effect during his budget speech.
Any funding above this limit has to be made either through a cheque or digital mode.
Investments in electoral bonds will be tax exempt, Jaitley said. Collections made through digital mode will be tax exempted, while money paid to a political party via cheque will receive tax breaks.
The electoral bonds which will be issued by notified banks can be redeemed by recognised political parties within a prescribed time limit.
Rucha Ranadive ,Associate Economist, Care Ratings said, "This move is expected to bring in better political funding pattern and transparency in transactions. However, there is a possibility that the identity of the donor will be revealed that won’t serve the purpose and will be similar to direct donation to the party."
She said, "The regulators should address this issue and give more clarity on working of electoral bonds."
D S Rawat ASSOCHAM Secretary General had similar views. He said, "While there is a popular pressure for full transparency and disclosure of names of both the donors and the receivers of the political funds, there is also a merit in the government contention about protecting the identity of the donors as their identification could lead to bigger problems."
Electoral bonds are expected to bring in some caution for political parties.
Rawat said, "No industrial house would like to be identified whether it donated to one political party or the other. "This way, business houses could be trapped in political rivalry."
Ranadive said, "Those are to issue these electoral bonds, are not expected to benefit unless some commission is levied on issuance and redemption of these bonds. Thus more clarity on these bonds by the government and the RBI is awaited."
InsightIAS said, "The scheme is left at the discretion of political parties or companies which means that it does not really addresses the issue of political funding. There is nothing in the scheme that will encourage the companies or industrial houses to buy these bonds by payment of cheques and political parties to take those bonds."