- Electoral Bonds are the most common method of funding for political parties, according to a new report.
- Electoral bonds have emerged as the principal source of financing for Indian political parties, with the BJP holding the largest share.
- According to the Association of Democratic Reforms, national and regional parties collected a total donation of 9,188.35 crore through electoral bonds between 2016-17 and 2021-22.
- The BJP received 5,271.97 crore, while the other national parties collected a total of 1,783.93 crore.
Political contributions made under the Electoral Bonds Scheme
- Donation breakdown: The 31 political parties studied received a total of 16,437.63 crore in donations over a six-year period. This was made up of 55.9% electoral bonds, 28.07% corporate bonds, and 16.03% miscellaneous sources.
- The BJP is the leader of the pack: The BJP disclosed electoral bond donations totaling 5,271.97 crore, surpassing the total donations of all other national parties combined.
- Congress and regional political parties: With 952.29 crore (61.54% of total donations), the Congress collected the second-highest sum through electoral bonds. The Trinamool Congress received 767.88 crore, accounting for 93.27% of total donations.
- Regional parties’ reliance on electoral bonds: Regional parties like the BJD, DMK, and TRS got a sizable amount of their overall donations via electoral bonds.
- National parties saw a 743% growth in electoral bond donations between 2017-18 and 2021-22, while corporate donations only increased by 48%.
Electoral Bonds Scheme Highlights
- Electoral Bond Scheme Implementation: During the critical time period examined in the research, the election Bond Scheme 2018 was implemented for election funding.
- Donation cap removed: The former cap of 7.5% of a company’s average three-year net profit for political donations was repealed by the Finance Act of 2017.
- Donation and Purchase: Electoral Bonds can be purchased by any Indian person or company formed in India at specified State Bank of India locations. The bonds are available in values of $1,000, $10,000, ten lakh, and one crore. The bonds can thereafter be donated to any eligible political party of the purchaser’s choice.
- Eligibility and Know Your Customer (KYC): To purchase Electoral Bonds, the buyer must meet the Know Your Customer (KYC) requirements and make the payment from a bank account. The scheme is only open to persons and businesses having Indian citizenship or incorporation.
- Bond Validity: Electoral Bonds have a 15-day life, preventing them from functioning as an alternative currency.
- Donors who pay less than 20,000 to political parties via Electoral Bonds are not required to provide their identity details, such as their Permanent Account Number (PAN). The bank, on the other hand, is aware of the donor’s identity.
- Only political parties registered under Section 29A of the Representation of the People Act, 1951, and receiving at least one percent of the votes in the previous general election are eligible to receive Electoral Bonds. The bonds can only be cashed through an authorised bank account.
Problems with the Scheme:
- A Lack of Transparency: The scheme has been chastised for allowing murky political fundraising. While the donor’s identity is recorded, it is not disclosed to the party or the public, restricting transparency.
- Donations made through Electoral Bonds may not qualify for income tax deductions, which may discourage contributors from engaging in the scheme.
- Concerns about privacy: Donors’ privacy may be jeopardised because the bank will know their identities.
- Differential Benefits: Because the government has access to information about donors and cash received, the plan may possibly favour political parties in power.
- Limitless Donations: Amendments to the 2017 Finance Act allow for limitless donations to political parties from individuals and foreign corporations without declaring the sources of financing, prompting concerns about the influence of money in politics.
Source: https://www.thehindu.com/news/national/electoral-bonds-chief-source-of-donations-for-political-parties-report/article67068053.ece#:~:text=Between%202016%2D17%20and%202021,9%2C188.35%20crore%20from%20Electoral%20Bonds&text=Electoral%20Bonds%20were%20the%20chief,BJP%20garnering%20the%20lion's%20share.