What is the electoral bond scheme, and why is it being opposed by transparency activists?

The Supreme Court has reserved its order on a plea seeking a stay on the sale of fresh electoral bonds ahead of state assembly elections in West Bengal, Tamil Nadu, Kerala, Assam and the Union Territory of Puducherry.

Announced in the 2017 Union Budget, electoral bonds are interest-free bearer instruments used to donate money anonymously to political parties.
A bearer instrument does not carry any information about the buyer or payee and the holder of the instrument (which is the political party) is presumed to be its owner.
The bonds are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, and the State Bank of India (SBI) is the only bank authorised to sell them.
Donors can purchase and subsequently donate the bonds to their party of choice, which the party can then cash through its verified account within 15 days. There is no limit on the number of bonds an individual or company can purchase.
SBI deposits bonds that a political party has not encashed within 15 days into the Prime Minister’s Relief Fund.

The anonymity provided to donors donating electoral bonds is the point of contention here. Through an amendment to the Finance Act 2017, the Union government has exempted political parties from disclosing donations received through electoral bonds.
This means the voters will not know which individual, company, or organisation has funded which party, and to what extent. Before the introduction of electoral bonds, political parties had to disclose details of all its donors, who have donated more than Rs 20,000.
According to transparency activists, the change infringes the citizen’s ‘Right to Know’ and makes the political class even more unaccountable.
Moreover, while electoral bonds provide no details to the citizens, the said anonymity does not apply to the government of the day, which can always access the donor details by demanding the data from the State Bank of India. This implies that the only people in dark about the source of these donations are the taxpayers.

In less than three years of their introduction, by virtue of the anonymity they offer to donors, electoral bonds have become the most popular route of donation.
More than half the total income of national parties and the regional parties analysed by Association for Democratic Reforms (ADR) for the financial year 2018-19 came from electoral bonds donations.

The Election Commission of India (ECI) had objected to the amendments in the Representation of the People (RP) Act, which exempt political parties from disclosing donations received through electoral bonds. It described the move as a “retrograde step”.
The ECI has asked the government to “reconsider” and “modify” the amendment.
Due to its anonymous nature, ECI was unable to determine whether the political party has taken any donation in violation of provision under Section 29(b) of the RP Act which prohibits the political parties from taking donations from government companies and foreign sources.

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