The Big Picture- Electoral Bonds
In order to structure the political funding better and to bring transparency, the Modi Government made several provisions in the Union Budget recently. An unprecedented announcement was made introducing electoral bonds for which the Government is gearing up to amend the rules of Reserve Bank of India. The proposal has found favour generally but the plan is seen as yet another attempt by the Government to step on the turf of the RBI. The electoral bonds which will be issued by notified banks can be redeemed by recognised political parties within a prescribed time limit.
Electoral bonds are more to do with eliminating black money and less to do with electoral reforms. The Government already took a step in the Budget that the political parties cannot take cash of more than Rs.2000 from a particular donor. This will go a long way in ensuring electoral reforms. The identity of the donor will not be disclosed if there is use of electoral bond which in case of cheque payment gets fully disclosed showing which companies and industrial houses are supporting a particular political party even if the funding is legitimate.
Even if there are electoral bonds, there is no limitation on giving cash to the political parties. At present also, the amount being paid as donation is shown less than the amount being actually given to the political parties. Since the money will come through banks, so to some extent black money will be reduced. But as far as corruption is concerned, it is still difficult to put a check with this step. Rather than having political funding, government funding can be a better tool to curb corruption which is followed in many countries of the world. However, in country like India, this might lead to further problems when already Government has expenditures on other serious issues like poverty, unemployment etc.
In order to bring electoral bonds, RBI Act will have to be amended because right now under the law only RBI can issue these bonds. After this the banks designated by RBI to issue these bonds will come into picture. These will be short duration bonds which means that they will have to be encashed within a period of 30 or 45 days as suggested by the Finance Minister. The scheme is left at the discretion of political parties or companies which means that it does not really addresses the issue of political funding. There is nothing in the scheme that will encourage the companies or industrial houses to buy these bonds by payment of cheques and political parties to take those bonds.
- If the country is moving towards digitization, even the Rs.2000 which can be paid in cash to the political parties should be paid online.
- If all the transactions and accounts being done and used by political parties are regulated under a piece of legislation, it might prove to be more effective and simple. There are many political parties at present which do not file the return every year.
- Setting aside the election of such candidates against whom there are evidences of spending black money or excluding them from future elections as penalty can be a strong measure.
- Voters have to be made aware through awareness campaigns as often illiterate voters are bribed for votes before elections.
These measures if taken into consideration seriously along with the will to control illicit funding in elections, some changes can be expected in future.