On January 2, 2018, the government had notified the Electoral Bond Scheme 2018. It was touted as an alternative to cash donations and to ensure transparency in political funding.
As per the provisions of the scheme, electoral bonds may be purchased by an Indian citizen or a company incorporated or established in India.
Only political parties registered under Section 29A of the Representation of the Peoples Act, 1951 and has secured no less than one per cent votes in the last Lok Sabha elections are eligible to receive electoral bonds.
The electoral accounts are issued by the State Bank of India (SBI). The electoral bonds can be purchased in the months of January, April, July and October.
Political parties are allotted a verified account by the Election Commission and all the electoral bond transactions are done through this account only.
The donors can buy these electoral bonds and transfer them into the accounts of the political parties as a donation. The electoral bonds are available in denominations from Rs 1,000 to Rs 1 crore.
The bonds remain valid for 15 days and can be encashed by an eligible political party only through a bank account with the authorised bank within that period only.
Every donor has to provide his/her KYC detail to the banks to purchase the electoral bonds. The names of the donors are kept confidential.
Before 2017, the electoral bonds scheme was for donation of over Rs 20,000. In 2017, the government capped the donation limit at Rs 2,000.
The Communist Party of India (Marxist) and the NGO Association for Democratic Reforms (ADR) had moved the Supreme Court against the electoral bonds. The argument was that ordinary citizens will not be able to know who is donating how much to which political party.
While the government argued that the privacy in electoral bonds ensures the donors privacy and also his right to vote in secret ballot, the CPI (M) had claimed that the non-disclosure of the names of the donors would add to the woes of the Indian democracy.
On April 5, Arun Jaitley, the Union finance minister, defended the electoral bonds and said they are aimed at checking the use of black money for funding elections, as was sought to be achieved through electoral trusts proposed during the UPA-II regime.
He said in the absence of electoral bonds, donors will have no option but to donate by cash after siphoning off money from their businesses.
On Friday, the Supreme Court refused the Centre’s submission that it should not interfere with the scheme at this stage and examine whether it has worked or not only after the ongoing general elections.
The top court said it would examine in detail the changes made in laws — income Tax, electoral and banking — to bring them in consonance with the electoral bond scheme and ensure the balance does not tilt in favour of any political party.