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Electoral Bonds:

GS Paper 2:

Topics Covered: Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.

 

Context:

Chief Justice of India N V Ramana has assured petitioners that the Supreme Court will take up for hearing a pending plea challenging the Electoral Bond Scheme, 2018.

 

What’s the issue?

Two NGOs — Common Cause and Association for Democratic Reforms (ADR) — have challenged the scheme, alleging that it is “distorting democracy”. The CJI has not specified any date for the hearing.

 

 

What are electoral bonds?

  • Electoral Bond is a financial instrument for making donations to political parties.
  • The bonds are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore without any maximum limit.
  • State Bank of India is authorised to issue and encash these bonds, which are valid for fifteen days from the date of issuance.
  • These bonds are redeemable in the designated account of a registered political party.
  • The bonds are available for purchase by any person (who is a citizen of India or incorporated or established in India) for a period of ten days each in the months of January, April, July and October as may be specified by the Central Government.
  • A person being an individual can buy bonds, either singly or jointly with other individuals.
  • Donor’s name is not mentioned on the bond.

 

Current Affairs

 

Issues associated with the scheme:

The Electoral Bond Scheme acts as a check against traditional under-the-table donations as it insists on cheque and digital paper trails of transactions, however, several key provisions of the scheme make it highly controversial.

Anonymity: Neither the donor (who could be an individual or a corporate) nor the political party is obligated to reveal whom the donation comes from.

Asymmetrically Opaque: Because the bonds are purchased through the State Bank of India (SBI), the government is always in a position to know who the donor is.

Channel of Blackmoney: Elimination of a cap of 7.5% on corporate donations, elimination of requirement to reveal political contributions in profit and loss statements.

 

InstaLinks:

Prelims Link:

  1. What are electoral bonds?
  2. Eligibility.
  3. Denomination.
  4. Features.
  5. Who can issue these bonds?

Mains Link:

Critically examine the effectiveness of electoral bonds in ensuring transparent political funding and suggest alternatives?

Sources: the Hindu.