Question.
What are electoral bonds? Are they capable of bringing transparency to the political funding system?
(UPPSC, UP PCS Mains General Studies-II/GS-2 2018)
Answer.
Electoral bonds were introduced in India in 2018 with the main objective of bringing transparency to the financial instruments of political parties.
Electoral bonds are issued by the State Bank of India and can be purchased at a specified price by individuals or entities including corporations. These bonds can then be donated to registered political parties. Electoral bonds are valid for 15 days from the date of issue, during which time political parties have to encash them in their bank accounts.
While the stated purpose of electoral bonds was to promote transparency in political funding through Electoral bonds, there is debate about their effectiveness in achieving this goal.
Here are the arguments for and against their potential to bring transparency to the political funding system in India:
Arguments in favor of transparency in the political funding system:
Donor anonymity:
One of the main features of electoral bonds is that the identity of the donor is not disclosed to the public or political parties. Proponents argue that this anonymity protects donors from potential retaliation and encourages them to contribute to political parties without fear of adverse consequences.
Formalizing political donations:
Electoral bonds provide a legal and formal channel for political donations, replacing cash transactions and other forms of unaccounted funding. This can increase the transparency and traceability of donations.
Trackable Transactions:
Electoral bonds are issued through authorized banks, from which transactions can be traced. It enables monitoring and auditing of political funding, which can help trace any illegal or unaccounted money flows.
Arguments against transparency in the political funding system:
Lack of Transparency:
Critics argue that electoral bonds actually undermine transparency in political funding. By allowing anonymous donations, the identities of donors and the extent of their contributions are hidden from the public and even political parties, hindering transparency and accountability.
Impact of Corporates:
There are concerns that electoral bonds may enable corporations and vested interest groups to influence political parties through large donations, without public scrutiny. This could potentially compromise the integrity of the political process and give an unfair advantage to those with financial resources.
Inequality and Unfair Advantage:
Electoral bonds are primarily available to those with significant financial means, potentially exacerbating the disproportionate influence of money in politics. Small political parties and independent candidates who have secured less than 1% of the vote in the last general election to the State Legislative Assembly or Lok Sabha cannot raise funds through electoral bonds. In this way, electoral bonds promote inequality among political parties.
Effect on Public Confidence:
The lack of transparency and accountability associated with electoral bonds can undermine public confidence in the political system. The perception of undeclared and potentially corrupt funding can undermine trust in democratic institutions.
In the end, we can say that electoral bonds are not yet capable enough to bring transparency in the political funding system, to enable it, there is a need to work on the arguments given against it.
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