Electoral Bonds: Transparency or a Veil for Corruption in India?

In the recent years, the debate over the introduction of electoral bonds in India continues to be a contentious issue. Proponents argue that these bonds have made the system more transparent and free from corruption, while critics question whether they are merely serving as a vehicle for covert funding and bribery.

The New System and KYC

The Bharatiya Janata Party (BJP) has championed the idea of electoral bonds, which allows individuals and entities to purchase bonds that can be redeemed by any political party. This system is designed to be more transparent through the implementation of Know Your Customer (KYC) and Aadhar verification, ensuring that every transaction is linked to a specific identity, including that of companies.

Masking Donations with Electoral Bonds

However, the system proposed by the BJP has raised serious concerns. Unlike traditional campaign donations, the use of electoral bonds allows for a high degree of anonymity. When a donor purchases a bond, the transaction is recorded only with the bond issuer (in this case, the State Bank of India), which means that the party receiving the bond does not know who provided the funds. This anonymity has led to accusations of bribery and corruption.

Regulatory Concerns and Objections

The Election Commission of India (ECI) and the Reserve Bank of India (RBI) have raised serious objections to the introduction of electoral bonds. According to these bodies, the transparency promised by electoral bonds is far from complete. The ECI highlighted that multinational companies and foreign entities can purchase these bonds, potentially funneling funds into political campaigns without full disclosure.

Discrepancies and Potential Malafide Intent

The controversial aspect of electoral bonds is their potential to circumvent disclosure requirements. Companies are not required to maintain records of these donations in their books, rendering much of the purported transparency meaningless. Moreover, only the State Bank of India holds records of bond purchases, which cannot be accessed under the Right to Information (RTI) Act unless there is a case of criminality. This secrecy opens the door to unscrupulous practices, raising questions about the true intentions behind these bonds.

Tax Implications and Donor Claims

Another important issue is that donors can claim tax exemptions for the amount they contribute through these bonds. This unique aspect of the system has led to debates about whether it encourages hidden fraud. The ruling party's focus on acquiring over 90% of the total funds through electoral bonds, despite objections from statutory bodies, raises suspicion. It suggests that the introduction of electoral bonds may be more about benefiting specific interests than ensuring electoral integrity.

Conclusion

The electoral bonds scheme in India remains a subject of intense debate. While proponents argue that it enhances transparency, critics highlight its potential to mask corruption and bribery. As the system continues to evolve, it is crucial to address the critical shortcomings that can undermine the integrity of the electoral process. Whether electoral bonds will be seen as a boon or a bane depends largely on how effectively mechanisms of transparency and accountability are implemented.