Yet another election season is upon us. The general election this time round is expected to be even more exciting as the spend is going to be the highest ever, according to political pundits. Electoral bonds were launched on January 2, 2018, with the promise of transparency and cleaning up the political funding system in India. Has such an outcome been realised?

What are electoral bonds?

Electoral bonds are bearer instruments in the nature of Promissory Notes issued by banks. They are interest-free instruments. They can be purchased for any value in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 crore. Electoral bonds are valid only for 15 days from purchase, during which time they can be used to make donations to specified political parties.

Why where they launched?

They were aimed at making political funding more transparent. The argument was that banks would be able to track the buyers of electoral bonds through their KYC details and thus ensure that clean money comes into system, while protecting the donor’s anonymity. The conventional practice of funding elections via cash was expected to be minimised with electoral bonds coming into the picture.

So why are they being seen as a boon for corporate donors?

It’s manna for corporates as their funding of political parties can remain anonymous. There is no cap on the quantum of electoral bonds that can be purchased by them and the payee’s name need not be disclosed in their annual reports. Companies also need not face awkward situations in dealing with political parties, as recipient names are not disclosed.

Who are eligible to buy ‘electoral bonds’?

Any citizen of India or a body incorporated in India can purchase bonds from specified branches of the State Bank of India.

When can they be bought?

Electoral bonds are available for purchase for 10 days each in the months of January, April, July and October. An additional period of 30 days would be specified by the Centre in the year of general elections. An electoral bond can be purchased by any donor with a KYC-compliant bank account.

Are all political parties eligible to receive electoral bonds?

Only political parties registered with the Election Commission (EC), which have secured not less than one per cent of the votes polled in the most recent election to the Lok Sabha or a State legislative assembly, can accept electoral bonds.

Will the EC know how much each political party receives?

Yes, electoral bonds can be encashed by the political party only through a designated bank account held with an authorised bank. Every political party has to submit details of its designated account to the EC.

The big question: Which political party has benefited the most from electoral bonds?

The BJP was the biggest beneficiary in 2017-18, accounting for 94.5 per cent of the bonds worth a little over ₹210 crore. The BJP is likely to emerge the biggest beneficiary this year as well.

So how much has been donated through electoral bonds?

Electoral bonds worth about ₹835 crore were bought during April-December 2018, nearly four times the amount in the previous fiscal. In the six tranches of electoral bonds floated until November 2018, bonds worth ₹1,056.73 crore were purchased.

What do critics have to say?

In the name of transparency, they say, the government has made political funding more opaque. The Income Tax Act and the Companies Act have been amended to facilitate corporate contributions through electoral bonds. The earlier 7.5 per cent ceiling on political donations by companies has been removed and even companies which make losses can now donate via electoral bonds.

A fortnightly column that unravels poll jargon for first-time voters.

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