Electoral bonds: Law Ministry, CEC objected to 1% vote share requirement

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News:According to an RTI reply,Law Ministry had objected to the stipulation that political parties must have a 1% vote share in the Lok Sabha or State Assembly elections in order to be eligible for the Electoral bonds scheme.

Facts:

What were the objections regarding Electoral Bonds?

Law ministry:

  • Law ministry had objected to the proposal that political parties must have a 1% vote share in the Lok Sabha or State Assembly elections in order to be eligible for the Electoral Bonds scheme.
  • They have recommended the imposition of a 6% vote share requirement (similar to the requirement for recognised State and national parties) or the removal of the vote share requirement entirely.
  • Further,according to the Election Commission of India,there are eight recognised national political parties,52 recognised State parties and around 2,487 unrecognised parties registered with the commission.
  • A 6% vote share is one condition for recognised parties.However,it is not clear how many of the unrecognised parties have a 1% vote share.

Reserve Bank of India:

  • The RBI Governor had also voiced concerns about the government’s move to allow bodies other than the RBI to issue the electoral bonds.He had also said that the bonds be issued only in digital form.
  • However,the government rejected the RBI’s suggestion that the bonds be only digital,saying that this would erode a major purpose of the bonds which is to provide anonymity to the donor.

Additional information:

About Electoral Bond Scheme:

  • Electoral bonds allows donors to pay political parties using banks as an intermediary.
  • The bond would be a bearer instrument in the nature of a Promissory Note and an interest free banking instrument.It can be bought for any value in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.

Eligibility:

  • As per provisions of the Scheme, electoral bonds may be purchased by a citizen of India or entities incorporated or established in India. 
  • A person being an individual can buy electoral bonds either singly or jointly with other individuals. 
  • Only the registered political parties which have secured not less than 1% of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.

Issuance of bonds:

  • The bonds are issued by Scheduled Commercial banks authorized by the Central Government to intending donors but only against cheque and digital payments (it cannot be purchased by paying cash).