The Narendra Modi government has mooted the use of electoral bonds to make political funding more transparent. Though details are not out yet, these bonds have been pitched as an alternative to cash donations made to political parties.
By definition, a bond is a debt instrument on which an interest is paid by the issuer to the holder. Electoral bonds, however, are unlikely to involve any interest payment. They will instead be like promissory notes.
Finance Minister Arun Jaitley, in his Budget speech, said political parties won't be allowed to accept cash donations of over Rs 2,000. All donations above that amount would be made by cheque, digital payments, or through electoral bonds, which will be introduced in due course.
The government will make a scheme. According to the scheme, there will be notified banks. Assume that SBI (State Bank of India Ltd.) is the notified bank. You'll be able to buy an electoral bond from that bank with either a cheque or digital payment. There will be a shelf life on those bonds, say 30 days or so.Arun Jaitley, Finance Minister, In An Interview With DD News
Also Read: Finance Minister Proposes Rs 2,000 Limit On Cash Donations To Political Parties
The shelf life on these bonds has not been decided yet, he said. To receive an electoral bond, a political party will need to give the details of one of its bank accounts to the Election Commission. The party can then receive funds in the form of electoral bonds only through that account.
“Banks know who has purchased the bonds, but there will be some anonymity with regard to where the bonds are going, so that the donor can protect his identity,” said Jaitley.
The attempt, he said, was to emulate the transparent manner in which multiple small donations are made to political parties during the US Presidential elections. As an additional benefit, the tax filings of political parties would become more transparent, he said.
Also Read: Budget 2017 Will Put An End To Annonymous Funding To Political Parties, Says Rahul Bajaj
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