Putting his weight behind the recently launched electoral bond scheme as an ideal option for political funding, Finance Minister Arun Jaitley said on Sunday this scheme envisages "total clean money" and was a "substantial improvement" in transparency over the present system of no-transparency.
Electoral bonds will cleanse the political funding system by permitting only clean money in donations and all the transactions would be through banking instruments, Jaitley said in a blogpost titled "Why electoral bonds are necessary".
It may be recalled that Jaitley had this past week tabled in Parliament the new Electoral Bond Scheme, which was first announced in Budget 2017-18.
In his blogpost, Jaitley highlighted that India had not been able to evolve a transparent political funding system, despite strengthening various institutions for the last seven decades.
"The present system (taking donations in cash) ensures unclean money coming from unidentifiable sources. It is a wholly non-transparent system", he said.
While the Government was open to consider all suggestions to further strengthen the cleansing of political funding in India, it has to be borne in mind that impractical suggestions will not improve the cash denominated system, Jaitley said. "They would only consolidate it", he said.
In fact, the choice has now to be consciously made between the existing system of substantial cash donations, which involves total unclean money and is non-transparent, and the new scheme which gives donors the option to donate through an entirely transparent method of cheque, online transactions or through electoral bonds.
"While all three methods involve clean money, the first two are totally transparent and the electoral bonds scheme is a substantial improvement in terms of transparency over the present system of no-transparency", he said.
It may be recalled that the Government had last March enabled India Inc to make donations to political parties without any fetters. It had removed the cap of 7.5 per cent of their (India Inc) average net profits for the last three financial years.
ELECTORAL BONDS: HOW IT WORKS?
A donor can purchase electoral bonds from a specified bank (SBI) only by a banking instrument. He would have to disclose in his accounts the amount of political bonds thar he has purchased. The life of the bond would be only 15 days. A bond can only be encashed in a pre-declared account of a political party. Every political party in its returns will have to disclose the amount of donations it has received through electoral bonds to the Election Commission.
As against total non-transparency in the present system of cash donations where the donor, the donee and the quantum of donations and the nature of expenditure are all undisclosed, some element of transparency would be introduced in as much as all donors declare in their accounts the amount of bonds that they have purchased and all parties declare the quantum of bonds that they have received.
How much each donor has distributed to a political party would be known only to the donor, according to Jaitley. This is necessary because once this disclosure is made, past experience has shown, donors would not find the scheme attractive and would go back to the less-desirable option of donating by cash, he said.