CJI has agreed to urgently hear a plea to stay the sale of a new set of electoral bonds on April 1, before Assembly elections in crucial states such as West Bengal and Tamil Nadu.

Note the denominations of the Electoral Bonds and the issuers.

What is the news?

• Data obtained through RTI has shown that illegal sale windows have been opened in the past to benefit certain political parties.
• There is a serious apprehension that any further sale of electoral bonds before the upcoming State elections would further increase illegal and illicit funding of political parties through shell companies.

What are Electoral Bonds?

• The electoral bonds were introduced on January 29, 2018.
• An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of the State Bank of India.
• The citizen or corporate can then donate the same to any eligible political party of his/her choice.
• The bonds are similar to banknotes that are payable to the bearer on demand and are free of interest.
• An individual or party will be allowed to purchase these bonds digitally or through a cheque.

How to invest?

• The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000 and Rs 1 crore (the range of a bond is between Rs 1,000 to Rs 1 crore).
• These will be available at some branches of SBI.
• A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice.
• Now, the receiver can encash the bonds through the party’s verified account. The electoral bond will be valid only for fifteen days.
• The 29 specified SBI branches are in cities such as New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata and Guwahati.

Issues with them

• The plea has argued that the sale of electoral bonds had become an avenue for shell corporations and entities to park illicit money and even proceeds of bribes with political parties.
• There are documents from the RBI and the Election Commission that say the electoral bonds scheme is detrimental to democracy.

Govt.’s view: Anonymity of the donor matters

• The government has defended the scheme in court, saying it allowed anonymity to political donors to protect them from “political victimisation”.
• The Ministry of Finance’s affidavit in the top court had dismissed the Election Commission’s version that the invisibility afforded to benefactors was a “retrograde step” and would wreck transparency in political funding.
• The government affidavit had said the clause of secrecy was a product of “well-thought-out policy considerations”.
• It said the earlier system of cash donations had raised a “concern among the donors that, with their identity revealed, there would be competitive pressure from different political parties receiving donation”.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now