More than 50% of the electoral bonds sold so far were in Mumbai and Kolkata, the response to a Right to Information query revealed on Monday. Electoral bonds worth Rs 1,880 crore – or 30.6% of total electoral bonds sold – were issued in Mumbai and those worth Rs 1,440 crore, or 23.5%, were issued in Kolkata. The value of electoral bonds sold in 12 phases between March 2018 and this October was Rs 6,128 crore.

Electoral bonds are monetary instruments that citizens or corporate groups can buy from the State Bank of India and give to a political party, which is then free to redeem them for money. These bonds are anonymous. The scheme was notified in January 2018.

Bonds worth Rs 919 crore were issued in New Delhi during this period, followed by Rs 846 crore in Hyderabad, Rs 330 crore in Bhubaneswar, Rs 211 crore in Gandhinagar, Rs 210 crore in Bengaluru and Rs 184 crore in Chennai.

Electoral bonds worth Rs 277 crore were sold since the General Elections this year. The State Bank of India had earlier said that it sold electoral bonds worth Rs 3,622 crore in March and April 2019. The month of April, during which Rs 2,256 crore worth of electoral bonds were sold ahead of the elections, remains the period with the highest sale.

In April, a Right to Information query had revealed that 99.8% of donations that political parties received through electoral bonds between March 2018 and January 24, 2019, were of the highest denominations – Rs 10 lakh and Rs 1 crore.

Also read:

  1. Controversial electoral bonds are not only opaque, they come at a cost to the Indian taxpayer
  2. Centre’s arguments for electoral bonds treat political parties as private concerns

Electoral bonds

Former Finance Minister Arun Jaitley first introduced the concept of electoral bonds in his Union Budget speech in February 2017. He had said the measure would bring “greater transparency and accountability” in political funding.

Electoral bonds, which are interest-free debt instruments, do not have the name of the donor and have a life of only 15 days after being bought. Electoral bonds can be purchased for 10 days each in January, April, July and October – the first issue for 2018, however, was done in March instead of January.

In April, the Supreme Court had issued an interim order on a plea arguing that electoral bonds are unconstitutional. However, the court decided to take up the matter only at a later date, saying the case could have a tremendous bearing on India’s electoral process.

The government has argued that by encouraging donors to put their money through the banking system, it makes it more likely that the funds will be “white”. But critics, Opposition parties and even the Election Commission of India have argued that the scheme is actually opaque and could endanger Indian democracy. A full explainer on why bonds are problematic and could potentially provide an undue benefit to the party in power is here.

Centre ignored RBI’s advice, claims report

A report in HuffPost India on Monday revealed that the Centre had ignored the Reserve Bank of India’s suggestion to not launch electoral bonds. The report said that four days before Jaitley proposed the scheme in 2017, a tax official flagged that such a system would require amendments to the Reserve Bank of India Act. In a note on January 28, 2017, the official sent a draft of the proposed changes to senior officials in the finance ministry.

A finance ministry official then forwarded the draft, with the message “For early comments”, to then RBI Deputy Governor R Gandhi. The central bank responded the next working day, opposing the scheme. It said electoral bonds would set a “bad precedent” and could be used to launder money.

The central bank’s reservations were dismissed by then revenue secretary Hasmukh Adhia, who claimed that the RBI had not “understood the proposed mechanism of having pre-paid instruments”. In a detailed reply to RBI’s concerns soon after, the government claimed that Parliament was “supreme and has the right to legislate” on all matters of governance, including the RBI Act.

Also read:

  1. Congress links electoral bonds to money laundering after report claims Centre ignored RBI’s advice
  2. The Election Fix: Despite note ban, cash is all over India’s elections – but can votes be bought?
  3. What if someone just buys the Indian government (and the Opposition) at a wholesale rate?

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