Electoral Bonds are financial instruments for making donations to political parties. These bonds are issued by scheduled business banks (most likely Reserve Bank of India and notified banks). So if you want to donate a political party, you can buy these bonds by making payment through cheque or digitally. No cash payment is accepted to purchase them. The receiver should redeem these bonds within prescribed time limit from the issuance of the bonds.
Electoral Bonds work like bearer cheque i.e. the issuing bank will remain the custodian of amount of the bond until the political party redeems them into their notified ( to the Election Commission of India) bank account. The identity of the donor is not disclosed to the receiver of these bonds.
Importance of Electoral Bond
As per the analysis done by National Election Watch (NEW) and Association for Democratic Reforms (ADR), Political parties, including national and regional parties, have received about Rs. 11,367.34 Cr., and about 68.90% (Rs. 7, 832.98 Cr.) of this amount is came from anonymous donors, while 12 regional parties have never filed their contributions report since Financial Year 2004-05 to Financial Year 2014-15.
The analysis also adds that the Income Tax Returns and Statements of the political parties, filled with the Election Commission of India (ECI), shows that the source of over two third (68.90%) of the total amount donated to them (Political Parties) is anonymous.
Presently, political parties are not required to reveal the name of individuals or organizations giving less than Rs20,000, because of this, the source of a huge amount donated to political parties is ‘anonymous’. So, this reason is among one of them that justify the Indian Government’s Decision to demonetize the large currency notes of Rs. 500 and Rs. 1000 (8th Nov, 2016) to wipe out the black money.
In order to fix this problem, the Union Budget 2017-18 has reduced the disclosure limit from Rs. 20,000 to Rs. 2,000, and made it mandatory to pay amount over this via cheque or digital payment mode.
The idea requires a modification in the Reserve Bank of India Act to make this scheme enabled. Non disclosure of the identity of the donor to the receiver may be a loophole of the electoral bond scheme. This idea seems very effective to make donors to take banking route to donate political parties.
