Cleaning up political funding is one of the key elements of electoral reforms. The electoral bonds, unveiled by the NDA government as part of an initiative to ensure transparency in funding to political parties, is a good beginning but falls short of the main objective. While there is a consensus on the need for comprehensive electoral reforms to eliminate corruption and slush money influencing politics, there is a danger that any half-baked measure in this direction could prove counter-productive. It is hoped that electoral bonds will not meet such a fate. There is no doubt that routing donations to political parties through a public sector bank marks a good beginning towards making the system transparent and accountable, but there are apprehensions that the bonds could bring in more opacity in view of the anonymity of the donors. While releasing the details of the new initiative, Finance Minister Arun Jaitley justified the secrecy regarding the names of donors on the ground that if they are disclosed, then there would be a tendency to shift to cash donations. The government is pitching electoral bonds as interest-free banking instruments that can be encashed by an eligible political party through a designated bank account. Donors can buy these bonds from SBI in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore, which serve as an alternative to the present practice of cash donations.
The bonds will now allow donors to pay political parties using bank as an intermediary. They can be given to any registered political party, which had secured at least 1% vote in the last election, ruling out those formed after the last poll. This is to prevent floating of bogus parties just before an election to collect funds. The political parties need to submit one bank account to the Election Commission for the purpose of encashing the donation. It would be fair to argue that the bonds would bring in a significant amount of transparency in electoral funding where there is ‘nil transparency’ on account of the present practice of anonymous cash donations that are largely unaccounted. However, there is an apprehension that the government of the day can access information on who is buying these bonds and keep a watch on donors. On the other hand, it can also be argued that anonymity that these bonds provide can be advantageous to the donors as it would insulate them from any possible harassment. Similarly, the political parties will not know who the donor is. The notification of the electoral bonds scheme follows a promise made in the 2017-18 Budget to undertake new initiatives to clean up the system of political funding.