What is electoral bond scheme
The electoral bonds system was introduced in 2017 by way of a Finance bill and it was implemented in 2018.
They serve as a means for individuals and entities to make donations to registered political parties while maintaining donor anonymity.
State Bank of India (SBI) issues the bonds in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.
Purchased by Indian citizens or entities established in India.
Can be bought individually or jointly with other individuals.
What is electoral bond scheme
Valid for 15 calendar days from the date of issue.
Authorized issuer through designated SBI branches.
Eligibility of Political Parties:
Only the political parties registered under Section 29A of the Representation of the People Act, 1951.
Secured not less than 1% of the votes polled in the last general election to the House of the People or the Legislative Assembly, are eligible to receive electoral bonds.
Purchase and Encashment:
Electoral Bonds can be purchased digitally or through cheques.
Encashment only through an authorized bank account of the political party.
Transparency and Accountability:
Parties must disclose their bank account with the Election Commission of India (ECI).
Donations are made through banking channels, ensuring transparency.
Political parties are obligated to explain the utilization of the funds received.
What are the challenges associated
Electoral bonds are donations to political parties that hide the identity of the donors and recipients.
They may compromise the right to know, which is part of the right to freedom of expression under Article 19 of the Constitution.
Anonymity may be compromised by government access to donor data.
This implies that the government in power can leverage this information and disrupt free and fair elections.
Potential for unauthorized donations violating regulations.
Risk of crony capitalism and infusion of black money.
Crony Capitalism is an economic system characterized by close, mutually advantageous relationships between business leaders and government officials.
Loopholes regarding transparency for corporate entities and donation limits.
As per Companies Act 2013, a company can make a political contribution only if its net average profit of three preceding financial years is at 7.5%.
The removal of this clause has raised concerns of black money in political funding through shell companies.
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