Electoral Bonds

Electoral Bonds were launched in the 2017-18 budget as an attempt to cleanse the way political parties get funded. So why is it that they are under such scrutiny and criticism now?

But first, let us go over the features of Electoral Bonds:

•         Any citizen, individual or corporate, can buy them via designated banks or via the Internet.
•        The bank issuing the bond runs KYC checks on the donor, and gets details of the account from which funds would be withdrawn to buy the bonds. Critically, you cannot buy these bonds using cash.
•        These are “bearer bonds”, i.e., they are not issued as payable to any one party. The donor can give the bond to any registered political party.
•        The bond has no information about the donor or the political party. That said, the issuing bank does have information of the donor (thanks to KYC).
•        Bonds come in denominations between Rs 1,000 to 1 crore.

You can see the plus points: it provides an alternative to cash payments, has checks via KYC, creates a mechanism for anyone to donate to any party, and anonymity prevents harassment by rival parties.

So what are the cons? That very anonymity means nobody knows how much an individual/company gave to a party either. Which opens it up as a form of bribery for favours and/or way to block competitors.

To me, even without Electoral Bonds, companies and individuals get favours for funding parties. So that’s a new problem due to this mechanism. At worst, it fails to fix an existing problem while addressing a few other problems.

But that still leaves the question the Opposition asks: Why do Electoral Bonds seem to overwhelming go to the ruling BJP? Sure, there could be malice in that pattern and is definitely worth checking out. But it is also possible the reason behind that is just demographics:

•          The BJP’s vote bank is generally more urban, people who were already familiar and comfortable with bonds, Internet transactions and compliant with KYC needs.
•          Urban folks are increasingly vocal in their political views, and Electoral Bonds gave them an easy avenue to contribute money.

Regardless, I think that Electoral Bonds are a step in the right direction of cleaning up part of the electoral system. Are they perfect? Obviously not. Should flaws be identified and fixed iteratively? Absolutely. But are they worse than the disease? Not at all. Therefore, it is ridiculous to shut the idea down altogether. If the world only moved when the perfect solution was available, we’d still be living in caves today.