Electoral bonds: Why the BJP is batting so hard for it

Opposition parties stage walkout after the Lok Sabha Speaker refuses to allow fair discussion on sale of electoral bonds for state elections

Electrol BondImage Courtesy: thehindubusinessline.com

Sonia Gandhi on Thursday, led a Congress walkout from the Lok Sabha after the Speaker disconnected the microphone the moment a party MP mentioned the Prime Minister’s Office while flagging a growing controversy over electoral bonds, The Telegraph reported.

Congress MP Manish Tewari said the Electoral Bond Scheme was originally meant for the Lok Sabha elections but the PMO had intervened to allow it for state polls too. Before his microphone was disconnected, Tewari had said the government had “made corruption official” by its decision to disregard the RBI’s objections to the bonds.

The brouhaha over electoral bonds has been going on for a long time now. So, what exactly are electoral bonds and why are they deemed so controversial?

What are electoral bonds – First introduced with the Finance Bill (2017), the electoral bond scheme was notified by the Central government on January 29, 2018. An electoral bond is like a promissory note that can be bought, digitally or by cheque, by any citizen or company incorporated in India from select branches of the State Bank of India. The citizen can then donate the bond to any party of his / her choice. Electoral bonds do not bear the donor’s name.

Issued in multiples of Rs. 1000, Rs. 10,000, Rs. 100,000 and Rs. 1 crore, they are valid for only fifteen days. They are available for purchase for 10 days in the beginning of every quarter – the first 10 days of January, April, July and October. They are tax deductible with donors being eligible for tax exemption provided IT returns are filed by the political party.

The Narendra Modi-led government had clarified that electoral bonds were being introduced to keep a tab on black money exchanging hands during election funding. According to it, the absence of electoral bonds would have left donors no option but to donate in cash, siphoning money off their businesses.

Why the controversy– The biggest controversy surrounding electoral bonds has been the one related to ‘anonymity’. Neither the purchaser of the bond, nor the political party receiving the funds is required to disclose the donor’s identity. This means, shareholders of a corporation and voters will remain unaware of the source of a political party’s funding.

Experts are of the view that if the electoral bonds scheme had been introduced to bring about greater transparency, the government must not restrain from allowing details of such donations to be made public. Opponents also say that it could lead to an influx of black money and because of the non-disclosure of the donors, the donations made through these bonds are equivalent to money laundering.

Under the electoral bond scheme, foreign companies, including shell companies can now donate how much ever they prefer, to political parties without having to disclose the details of their contributions in the annual statement of accounts.

The Reserve Bank of India (RBI) and Election Commission of India (ECI) both have been critical of the scheme’s anonymity clause.

Last Friday, the Supreme Court (SC) refused to stay the usage of electoral bonds for political donations, but said that all parties must reveal the details to the Election Commission by May 30.

A report published by The Quint in 2018 found that bonds carry an alphanumeric code which can be seen under a UV light. At the time, the Finance Ministry issued a press release stating that security features had been built in to eliminate chances of forgery or presentation of fake bonds, but is not noted in any record by the bank and can’t be used to track a donation. This was confirmed in an RTI filed by Commodore Lokesh Batra.

This means, while the public remains in the dark about such information, the government will have access to all the details with regards to the purchase and donations; which just means they are likely to not only have details about bank accounts and transactions, but also political preferences.

Another controversy unearthed by the RTI and reported by the Huffington Post was that the Prime Minister’s Office (PMO) directed the Finance Ministry to break its own rules to approve the unscheduled and illegal sale of electoral bonds for state assembly elections on two separate occasions, when the rules allowed for only four 10-day windows in January, April, July and October, apart from an additional 30 days sale in years when a general election is scheduled.

The PMO’s intervention to open extra windows for political donations via electoral bonds is significant because the limited sale periods were intended as a precaution against money laundering. As HuffPost India has reported, the Reserve Bank of India had initially recommended that the bonds only be sold twice a year for a short duration.

SBI was supposed to sell the first tranche in April 2018, but the first round was opened a month earlier in March 2018 instead. Rs 222 crore worth of bonds were bought in this round, with 95% going to the BJP.The following month, in April 2018, SBI opened another window for political donation — in this, bonds worth another Rs 114.90 crore were purchased and donated.With the Karnataka state elections due in May 2018, the PMO instructed the finance ministry to open a special and extra window of another 10 days.



(Source – The Huff Post)

Who got how much?

The Quint reported that around Rs. 6,000 crore worth of electoral bonds were sold in the Financial Year 2018 – 19, out of which over Rs. 4,500 crore went to the ruling Bharatiya Janata Party (BJP).

While state political parties have filed their annual audit reports, the last date to file the same being October 31, the BJP is yet to file it with the Election Commission (EC). Section 139 4B of the IT Act requires a political party to furnish total income including the exempted contributions with all particulars to the EC. If the party fails to meet the deadline with regards to the filing of the annual audit report, the EC can only send a show cause notice seeking a reply for the delay.

The Congress claims that it received Rs. 550 crore in electoral bonds and has submitted the report to the EC, but the EC has not made the report public yet.

The Trinamool Congress (TMC) received Rs 97.28 crore, the Telangana Rashtra Samithi (TRS) received Rs. 141.50 crore, the Janata Dal United (JDU) received Rs. 35.35 crore, the Biju Janata Dal (BJD) received Rs. 213.50 crore and the YSR Congress Party (YSRCP) received Rs. 99.84 crore through electoral bonds.

Data shows that there were few takers for electoral bonds of lower denominations, with almost 92% of the Rs. 6,000 crore collected through the 12 rounds of electoral bonds issued between March 2018 and October 2019 was in the highest denomination of Rs. 1 crore. This, completely contradictory to the justification the Finance Ministry had given. When the RBI suggested that the bonds be in an electronic form and not paper, the ministry had said, “The physical mode is necessary at least initially to popularise Ebs (electoral bonds) and cover people of all strata. Small donors may not be familiar and comfortable with the digital processing and would like to get a physical bond.”

(Source – The Telegraph)            

Who opposed

The Congress and the Communist Party of India (CPI – M) have always vehemently opposed the electoral bond scheme. Apart from these parties, the Shiromani Akali Dal (SAD) has also raised objections regarding the same.

While the Congress and CPI (M) have opposed the anonymity criteria, stating that details of both, recipients and donors should be made public for better transparency, the SAD has said that only profit-making companies should be allowed to make donations through electoral bonds.

Congress treasurer Motilal Vohra had said, “I am afraid this will not ensure transparency in electoral funding; on the contrary, it will be a completely opaque mechanism.”

The CPI General Secretary Sudhakar Reddy wrote, “There is a demand from the people that political parties funding should be transparent. It is a justified demand to understand whether ruling parties are in quid-pro-quo with vested interests or corporate houses. In fact, the present method of political funding is more transparent than the secretive amendments you (ruling party) are introducing”, demanding the immediate rollback of the “secretive political bonds scheme”.

The BJP overruled the RBI’s decision, arm-wrested SBI into accepting expired bonds and did not submit its audit report in time. Today, after the SC refused to stay the sale of bonds, the party is accusing opposition parties of protesting against the electoral bond scheme claiming they will no longer be able to indulge in corruption, calling them an alliance of defeated and dejected politicians. If this is the case and the BJP is pro-transparency, why has it not filed its reports with the EC yet? Or is it just another well thought out Big Brother move to slyly spy on its public?


Govt Made SBI Accept Expired Electoral Bonds Sold In Illegal Window

Yes, its BJP that received maximum corporate donations in 6 years: ADR report

SBI issued electoral bonds worth Rs 3,622 crore in March and April: RTI

Electoral Bonds: SC directs all parties to reveal political funding details to EC



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