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Posted at: Jan 12, 2018, 1:21 AM; last updated: Jan 12, 2018, 1:21 AM (IST)

Poll bonds glossed with opacity

The electoral bond scheme puts a gloss of opacity around disclosures as it gives anonymity to donors, exempting them from disclosures to the IT and ECI authorities, while extending tax exemption benefits.
Poll bonds glossed with opacity

Suresh Kumar Goyal

A retired civil servant

A measure, unveiled by union Finance Minister Arun Jaitley on January 2, touted as a framework for cleaning up political funding and stamping out black money from the body-politic, will have the reverse effect of creating a safe haven of anonymity for corporate funding to the political parties sans accountability. The latest electoral bond scheme can be described as an opaque glasshouse set up under the garb of transparency and electoral reforms. Sadly, there is not a whimper of protest from the opposition parties.

These electoral bonds would be like any other bearer promissory instruments such as currency notes or demand drafts, which can be purchased from specified branches of State Bank of India by the intending donors. The bonds would be available in the multiples of Rs 1,000, Rs 1,00,000, Rs 10,00,000 etc to the citizens of India or any bodies incorporated in India. With the maximum validity period of 15 days, there would be no interest accrual to the purchasers of these electoral bonds. The donations can be encashed into designated bank account of any registered political party (a party that has obtained at least 1% of total votes in the previous elections), after ensuring that the donor as well as the recipient party have complied with the KYC (know your customer) norms. 

With the purported aim of safeguarding the intending donors from reprisals, the scheme provides complete insulation of donor's identity from all other persons, including such regulatory and constitutional bodies as Income Tax Department and Election Commission of India, except the issuing bank. However, the donors will have the option of concealing from or revealing their identity to the recipient political party. The bonds would be available for purchase for 10 days in January, April, July and October, with an additional window of 30 days, to be specified by the Union Government, provided for in the scheme in a Lok Sabha election year.

"Electoral bonds will ensure clean money and significant transparency, against the current system of unclean money," Arun Jaitley has claimed. Going gaga over the scheme, the government claims that the measure would usher in an era of transparency and stamp out black money by routing all transactions through banks and following KYC norms. Claiming that India faces a political funding trilemma — curbing black money, transparency and broadening the constituency of legitimate donors — the apologists for the scheme say that it is a pragmatic move to achieve an optimum balance between the three components of the aforestated trilemma. 

But they are either missing woods for the trees, or conveniently ignoring some disquieting aspects of the scheme.

What causes unease is the fact that the government failed to maintain the propriety of consulting either the political stakeholders in the system, or the Election Commission of India - the body vested with the plenary powers to superintend all election matters under the Constitution. Previously, the Election Commission of India had stated before one of the parliamentary panels that the issuance of electoral bonds, far from being conducive to democracy, would be a retrograde step. Yet, the government hastily notified the electoral bond scheme -that too without sounding any of the political stakeholders like the Congress, TMC, CPI, CPM, BSP, RJD etc, or its allies like the Shiv Sena or JDU. 

This issuance of notification by the Finance Ministry looks all the more brazen, when viewed in the light of the fact that constitutional validity of the Finance Act 2017 (passed as a money Bill), that sought to enact enabling provisions in the law to facilitate the issuance of electoral bonds, is under challenge in the Supreme Court. The present ruling dispensation seems to act on the presumptuous belief that it alone is the repository of Solomon-like wisdom and the opposition parties and even the constitutional bodies like the Election Commission of India count for nothing.

One aspect of the electoral bond scheme is that it will disturb the level playing field amongst the political parties by leveraging the position of the ruling party in overt and covert ways. As all transactions under the scheme would be routed through the banks, the SBI would be privy to sensitive and confidential information pertaining to the donors and the political parties. The apprehension that the ruling party may arm-twist the bank, forcing it to disclose sensitive information, is not misplaced, keeping in view the fact that Urjit Patel, RBI Governor, tried to obfuscate a parliamentary panel on how much currency declared as illegal tender has been deposited with banks post demonetisation. A move is already afoot in the government to link all bank accounts with Aadhaar, which would make the outreach of the government to access such information draconian — the Orwellian state is truly upon us! 

There is no example parallel to this scheme in any other democracy of the world. The scheme gives complete anonymity to the donors, exempting them from any disclosures to the income-tax authorities and the Election Commission of India, while extending all benefits of tax exemptions to the individual as well as company donations. The donors have been given the option of concealing or revealing their identity from the recipient political parties, leaving the door open to them of striking a quid pro quo with these parties at opportune time. The emphasis in the western democracies is upon the disclosure of the source of funding, whereas our electoral bond scheme puts a gloss of opacity around such disclosures, which may lead to the creation of a safe haven for corporate funding of political parties.

(Views are personal)


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