NEW DELHI: The government on Tuesday announced details of the electoral bond scheme that it said is an important step towards transparency in poll-funding and a measure to discourage cash donations during elections that are often shrouded in secrecy and amount to black money transactions.
Announcing the move in the
Lok Sabha,
finance minister Arun
Jaitley said the electoral bond would be a bearer instrument in the nature of a promissory note and an interest-free banking instrument. A citizen of India or a company incorporated in the country will be eligible to purchase the bond.
The bonds will be issued for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore from the specified branches of
State Bank of India (SBI). "The idea is to move away from the cash system," Jaitley told reporters. "Electoral bonds will ensure clean money and significant transparency against the current system of unclean money," he said.
Under the scheme, political parties will not need to name the donors but declare amounts received. The donor, if a business entity, will have to show the value of bonds purchased in its balance sheets. Admitting that political parties being spared from naming donors reduced transparency, Jaitley said the measure was a compromise that could be improved on in the future.
Businesses are chary of revealing how much they donated to ruling or opposition parties and if forced to do so, may choose to stick cash donations. The scheme may take two three months to roll out as the bonds will be printed on high security paper.
The bonds have to be redeemed within a fortnight, a condition intended to curb a parallel and illegal trade in the instrument. The bonds will have to be encashed in accounts parties have declared to the election commission.
Earlier, while detailing the scheme, the FM said the bonds are a part of the government's fight against black money and an effort clean up political funding and follows measures like demonetisation announced in November, 2016.
"Let me clear misconceptions, if any. I had announced in the budget speech that political funding needs to be cleansed up. A very large part of donation coming to political parties by donors, quantum and source is not known.... electoral bonds substantially cleanse the system," he said. "Donors who buy these bonds, their balance-sheet will reflect. It will ensure cleaner money coming from donors, cleaner money coming to political party and ensure significant transparency," he said.
The FM said under the current system, often the donor, quantum and source of funds is not known. The purchaser would be allowed to buy these bonds only after fulfilling know your customer (KYC) norms and by making payment from a bank account. It will not carry the name of payee. The bonds shall be encashed by an eligible political party only through a designated bank account with the authorised bank.
They would have a life of only 15 days during which it can be used for making donation only to the political parties registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and which secured not less than 1% of the votes polled in the last general election, or a legislative assembly.
The bonds shall be available for purchase for a period of 10 days each in January, April, July and October, as may be specified by the Central government. An additional period of 30 days shall be specified by the central government in the year of the general election.
