• UGI USER
  • Nov 17, 2023
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Q Examine the impact of electoral bonds on the transparency of political funding in India. Critically analyze the pros and cons of electoral bonds as a means of financing political parties. (GS 2)

 

Introduction: Introduce with writing in brief about Electoral bonds in India.

 

Body: 1. Write about how electoral bonds bring transparency.

2. Highlight pros and cons of electoral bonds.

 

Conclusion: Conclude with how electoral bonds have provided a formal channel for funding.

 

Answer-

Electoral bonds are financial instruments introduced in India to facilitate transparent political funding. Issued in specified denominations by authorized banks, these bonds allow individuals and corporations to make legitimate contributions to political parties. As stated by then Finance Minister Mr Jately In “an effort to cleanse the system of funding of political parties,” electoral bonds were introduced in 2018.

How Electoral Bonds Bring Transparency:

  • Formalized Transactions: Electoral bonds shift political funding from cash transactions to formalized, traceable banking channels, reducing the scope for unaccounted contributions.
  • Auditable Trail: The use of authorized banks creates an auditable trail for donations, enhancing transparency by allowing scrutiny of the flow of funds in political financing.
  • Reduced Cash Influence: By minimizing the use of cash, electoral bonds aim to decrease the influence of black money in politics, contributing to a cleaner and more transparent funding process.
  • Encouraging Corporate Accountability: The bonds provide a legal avenue for corporations to contribute, fostering accountability and increasing transparency in the participation of corporate entities in political funding.
  • Trackable Digital Transactions: The introduction of electoral bonds has led to an increase in digital transactions, providing a trackable and accountable means of financial contributions to political parties.

Pros:

  • Encouraging Formal Donations: One of the primary advantages of electoral bonds is that they encourage formal and transparent donations to political parties. By channeling funds through banking channels, the bonds aim to reduce the influence of black money in politics.
  • Privacy for Donors: Electoral bonds provide a level of privacy to donors, allowing them to contribute without fear of reprisal or victimization. This may encourage more individuals and organizations to participate in the political funding process without fear of backlash.
  • Reducing Cash Transactions: Electoral bonds aim to minimize the use of cash in political funding, thereby reducing the likelihood of unaccounted money flowing into political campaigns. This contributes to the broader goal of curbing corruption in the political system.
  • Institutionalized Process: The introduction of electoral bonds formalizes the process of political donations, making it more institutionalized. This shift from informal, cash-based transactions to a structured system is expected to enhance transparency.

The lack of transparency and potential misuse was highlighted in the case of Communist Party of India (Marxist) v. Union of India, where the Supreme Court acknowledged concerns but did not strike down the scheme.

Cons:

  • Anonymity Issues: The anonymity provided by electoral bonds raises concerns about the lack of transparency regarding the sources of political funding, which is essential for maintaining public trust.
  • Limited Scrutiny: Electoral bonds escape the scrutiny of election commission and income tax authorities, which can be problematic for ensuring accountability. This lack of oversight raises questions about the effectiveness of the bonds in curbing corruption and ensuring transparency.
  • Potential for Misuse: The lack of a cap on corporate donations may lead to a concentration of power in the hands of a few entities, undermining the democratic principles of a level playing field.
  • Potential for Money Laundering: There is a risk that these bonds could be used to funnel illicit funds into political parties. This lack of transparency makes it challenging for regulatory authorities to track and investigate the source of funds, potentially undermining the integrity of the electoral process.

 

Electoral bonds have introduced a new dimension to political funding in India. While they have reduced the use of cash donations and provided a formal channel for funding, the lack of full transparency remains a concern. Further reforms and enhanced oversight are needed to ensure that electoral bonds contribute to a more transparent and accountable political system in India.

 

Source: – https://www.scobserver.in/journal/electoral-bonds-and-democracy-whats-at-stake/

https://www.livemint.com/politics/policy/electoral-bonds-boon-or-bane-for-india-s-political-funding-system-11575424422379.html