A report of regional political parties published by the poll rights group Association for Democratic Reforms shows that 51 per cent of the electoral funds raised by them came from electoral bonds.
The report, titled “Analysis of income and expenditure of regional political parties”, analysed the declared audit reports by 42 regional parties for the financial year (FY) 2019-20.
The political parties are required to submit their audit reports to the Election Commission of India, or ECI. Forty-two regional political parties, including Telangana Rashtra Samiti (TRS), Biju Janata Dal (BJD), Dravida Munnetra Kazagham (DMK), Aam Aadmi Party (AAP), Janata Dal (JD), All India Anna Dravida Munnetra Kazagham (AIADMK) and Rashtriya Janata Dal (RJD) have submitted their audit reports. While some like MNS, JKNPP, RLSP, BPF etc are yet to submit their reports.
The report states that the total declared income of the 42 regional parties is Rs. 877.957 crores. Of this amount, 50.97% or Rs. 447.498 crores were received through electoral bonds. However, only 14 parties have provided information about funds received through electoral funds.
What are electoral bonds?
Electoral bonds are promissory notes a citizen or company can buy from the State Bank of India at select branches. They are bought through cheques or digital payment and are available in multiples of Rs. 100: Rs. 1000, Rs. 10,000, Rs. 100,000 up to 1 crore.
The buyer gives them to the political party of their choice. The party can, after a given period, cash in these electoral bonds using their verified accounts at the SBI, and they will get the exact amount for which the bonds were bought.
Electoral bonds were introduced in the Finance Bill (2017) and implemented by the government in 2018. Electoral bonds do not bear the name of the person who bought them, thus providing anonymity to the person or corporate entity. This may be important for the security or restrictions of the donor. Further, as these bonds are processed through the bank, black money cannot be used. This prevents the use of tax evaded funds in election funding.
The electoral bond scheme has found many critics, who point out that while the system aims to achieve transparency and prevent the use of black money, it is actually very opaque. The information about the transactions in electoral bonds has been kept beyond the scope of the Right to Information Act (RTI) and as such is not available for scrutiny in the public domain.
Furthermore, a corporation is required to provide details of its donations, including those to political parties, in its yearly financial report. However, the electoral bonds forgo this requirement for the sake of anonymity. Groups like the ADR point out that this will lead to increased money laundering and the use of black money. Voters can also have no idea about which companies are funding which political party, or if the funding is coming from shady shell companies which exist only on paper.
“ADR has filed a petition with the Supreme Court questioning the legitimacy of the practice of raising money through electoral bonds. Electoral bonds are secretive funding and against the interest of democracy,” said Prof Trilochan Sastry, Founder Member, ADR.
Another point of controversy is the “sale of coupons”. According to Sastry, “The Income Tax Department should investigate ‘sale of coupons’ by parties. It is an ambiguous term parties use by selling coupons to people below Rs 20,000 without declaring where the proceeds are coming from.” Parties like JDS, SAD, JVM-P, and LJP have declared that they received a total income of Rs 14.884 crore from ‘sale of coupons’ in FY 2019-20.
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