New Delhi, Jan 2 : The government on Tuesday notified a scheme of electoral bonds in a bid to clean the system and bring transparency in political funding in the country.
Announcing the launch of the scheme in Parliament, Finance Minister Arun Jaitley said the electoral bonds will bring a substantial amount of transparency in political donations against the present system of contributions.
The electoral bonds will be a bearer instrument in the nature of a promissory note and interest-free banking instrument which any citizen or a corporate body will be eligible to purchase.
The bonds would be issued in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore from specified branches of SBI.
The purchaser would be allowed to buy the bonds after fulfilling the KYC norms and by making payment from a bank account. It will not carry the name of the payee.
The bonds would have a life of only 15 days during which it can be used for making donations only to registered political parties which have secured at least one per cent of the votes polled in the assembly or Lok Sabha elections.
“Fifteen days between buying and selling is to ensure that they don’t turn into parallel currency,” Jaitley said.
In his Budget speech last year, the Finance Minister had announced that the government would bring in a scheme of electoral bonds to clean the system of political funding in the country.
Jaitley told reporters later that the bonds will be reflected in the balance sheet of the person who purchases them but there will not be a disclosure about the political party to which these have been given. He said every political party will file return every year before the Election Commission as to how many bonds came to its notified account.
“Which donor gave how much to a political party will not be told. Once that is told and that identity is known, the past experience has shown, as in the case of cheque donations, then people will again go back and prefer to give by cash rather than allow clean money. Donations by cheques has not helped significantly improve the situation,” he said.
Jaitley also said that not disclosing the party to whom bonds have been given will substantially help a lot of opposition parties. “Because in case a disclosure is made, it will be in the favour of ruling party and not in favour of the opposition party. The fact that it is not known, people will be free to donate to any political party of their choice,” he said.
In an apparent reference to Congress leader Mallikarjun Kharge, who had asked the purpose behind not disclosing names of political parties, Jaitley said people expressing apprehension should suggest a better system. “If better system is to disclose everything, then the past experience of 70 years has shown you will go back to the cash system. The idea is to move away from cash system,” he said.
Jaitley said he wished that names were ultimately disclosed, but if it was done today, the new scheme may not take off.
He said the intention of floating these bonds is to bring transparency in the funding of political parties and the election funding mechanism at large.
“The political funding mechanism developed over the last 70 years has faced wide criticism as people don’t get clear details about how much money comes, from where it comes and where it is spent,” he said.
He said to change the system of anonymous donations, the government brought a change in 2001 which made all donations made through cheques tax-exempt but that did not make a huge impact as only a few parties got some money through cheques.
“Even today, anonymous donations are very large in quantity. This money is from unknown sources and is neither clean nor transparent,” he said.
The bonds under the scheme shall be available for purchase for a period of 10 days each in the months of 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 Lok Sabha elections.
“The bond shall be encashed by an eligible political party only through a designated bank account with the authorised bank.”
Earlier in the Lok Sabha, Jaitley said the move would bring transparency as each donation will be reflected in the balance sheet of the donor.
“Therefore, this will be cleaner money coming from the donor, cleaner money coming into the hands of a political party and there would be a significant amount of transparency,” said the Minister.
Jaitley said there was no transparency when cash is given as the “source of money is not known, the donor is not known, where it is spent is not known”.
He said people need to know how much funding comes, what kind of funding it is, from whom has it come and where is it spent.
Updated At 17:20 IST