Focus: GS II- Polity and Governance
Why in News?
Sale of Electoral Bonds at Authorized Branches of State Bank of India (SBI).
What are Electoral Bonds?
- An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
- The citizen or corporate can then donate the same to any eligible political party of his/her choice.
- The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest.
- An individual or party will be allowed to purchase these bonds digitally or through cheque.
Why have they attracted criticism?
- The central criticism of the electoral bonds scheme is that it does the exact opposite of what it was meant to do: bring transparency to election funding.
- For example, critics argue that the anonymity of electoral bonds is only for the broader public and opposition parties.
- The fact that such bonds are sold via a government-owned bank (SBI) leaves the door open for the government to know exactly who is funding its opponents.
- This, in turn, allows the possibility for the government of the day to either extort money, especially from the big companies, or victimise them for not funding the ruling party — either way providing an unfair advantage to the party in power.
- Further, one of the arguments for introducing electoral bonds was to allow common people to easily fund political parties of their choice but more than 90% of the bonds have been of the highest denomination (Rs 1 crore).
- Moreover, before the electoral bonds scheme was announced, there was a cap on how much a company could donate to a political party: 7.5 per cent of the average net profits of a company in the preceding three years. However, the government amended the Companies Act to remove this limit, opening the doors to unlimited funding by corporate India, critics argue.
Government’s response defending the Electoral Bonds scheme
- The Government said that the Electoral Bond Scheme allowed anonymity to political donors to protect them from “political victimisation”. The earlier system of cash donations had raised a “concern among the donors that, with their identity revealed, there would be competitive pressure from different political parties receiving donation”.
- The Ministry of Finance’s affidavit in the top court had dismissed the Election Commission’s version that the invisibility afforded to benefactors was a “retrogade step” and would wreck transparency in political funding.