Recently, the Chief Justice of India agreed with advocate Prashant Bhushan to urgently hear a plea by NGO Association for Democratic Reforms 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.
Electoral bond is an interest-free bearer instruments used to donate money anonymously to political parties. A bearer instrument does not carry any information about the buyer or payee and the holder of the instrument (which is the political party) is presumed to be its owner.
The bonds are available for purchase by any person (who is a citizen of India or incorporated or established in India) for a period of ten days each in the months of January, April, July and October as may be specified by the Central Government.
Using electoral bonds is quite simple. 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.
On 2017, the electoral bonds were introduced with the Finance Bill. On January 29, 2018 the Narendra Modi-led NDA government notified the Electoral Bond Scheme 2018.
As per provisions of the Electoral Bond Scheme 2018, Electoral Bonds may be purchased by a person, who is a citizen of India or incorporated or established in India.
A person being an individual can buy Electoral Bonds, either singly or jointly with other individuals. Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the Electoral Bonds.
The Electoral Bonds shall be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.
The Election Commission said that “any donation received by a political party through an electoral bond has been taken out of the ambit of reporting under the Contribution Report”, and if information on the money received through such bonds is not reported.
It cannot be ascertained whether the political party has taken any donation in violation of provisions of the Representation of the People Act, which “prohibits the political parties from taking donations from government companies and foreign sources”.
The Commission also flagged the issue of laws being changed to allow political parties to receive contributions from foreign companies, which would “allow unchecked foreign funding of political parties in India which could lead to Indian policies being influenced by foreign companies”.