Electoral Bonds: Govt Printed Bonds Worth Rs18,531 Crore but Sold only Rs7,994.98 Crore in 18 Phases
Moneylife Digital Team 03 December 2021
Expecting a good response from the public for its electoral bonds (EBs), the Narendra Modi-led Union government printed bonds worth Rs18,531.50 crore. However, bonds worth Rs7,994.98 crore were sold during 18 phases, shows information received under the Right to Information (RTI) Act.
Information obtained by Commodore (Cmde) Lokesh Batra (retd) under RTI shows that the Union government procured bonds worth Rs18,531.50 crore during calendar years 2018 and 2019. These bonds were sold in 18 phases through 29 designated branches of the State Bank of India (SBI).
During 2019, the government appears to have preferred bonds with the highest value denomination of Rs1 crore and procured 10,000 units of this EB from the Indian Security Press at Nashik. This number is almost two and a half times the number of bonds the government had procured in 2018.
Interestingly, during 2019, the government seems to have wholly ditched EBs with a denomination value of Rs1,000 and Rs10,000. At the same time, the Union government preferred bonds with a denomination value of Rs1 lakh and Rs1 crore during the year. It even obtained a smaller number of bonds in the denomination value of Rs10 lakh during 2019.
From 2018 to 2021, SBI sold 15,420 electoral bonds, of which 12,274 bonds worth Rs7,994.97 crore were encashed. About 146 bonds worth Rs20.28 crore that remain uncashed were transferred to the Prime Minister’s National Relief Fund (PMNRF).
Information obtained by Cmde Batra shows that during the 18th phase of sale of electoral bonds, SBI has earned Rs40.18 lakh as commission, excluding taxes. However, it was not paid its commission for the past three phases and had sent a letter to the ministry of finance (MoF) to release its payment.
The letter sent by SBI on 25 October 2021 to the joint secretary (budget) says, “The total commission works out to Rs40.18 lakh plus 18% goods and services tax (GST) for which we seek payment from MoF. The claim for release of commission for phases 16 and 17 amounting to Rs55.28 lakh has already been lodged. We request you to arrange for the release of the total commission amounting to Rs95.47 lakh along with GST at 18%.”
The anonymity provided to the donors by electoral bonds (EBs) makes it the preferred choice for big donors, including corporates.
On 2 January 2018, the ministry of finance had notified the EB scheme. As per the scheme, an electoral bond is a bond issued like a promissory note. It may be purchased by a person who is a citizen of India or entities incorporated or established in India. The bonds are issued in multiples of Rs1,000, Rs10,000, Rs1 lakh, Rs10 lakh and Rs1 crore.
These are available at specified branches of SBI, and any account-holder compliant with know-your-customer (KYC) norms can buy these bonds. Donors can donate the bonds to their party of choice, which can then be encashed by the party’s verified account within 15 days. The bond does not carry the name of the buyer or the payee.
The recipient political party does not have to disclose who it has received the bond from in its account. Neither does the donor entity have to state to which party it has donated. Also, as per the scheme, only eligible political parties with a 1% vote share are eligible to buy electoral bonds.
According to an analysis by Association for Democratic Reforms (ADR), a non-government organisation (NGO), during FY19-20, four national parties, namely, Bharatiya Janata Party (BJP), Indian National Congress (INC), All India Trinamool Congress (AITC) and Nationalist Congress Party (NCP) collected 62.92% or Rs2,993.826 crore of their total income from donations through electoral bonds.
BJP received donations worth Rs2,555 crore through electoral bonds, INC received Rs317.86 crore, AITC received Rs100.46 crore and NCP received Rs20.50 crore for EBs.
“Given the anonymity provided to donors by the scheme, it is seen that electoral bonds have emerged as the most popular mode of donations to National political parties for FY19-20. More than 62% of the total income or Rs2,993.82 crore of seven national parties came from donations through EBs, wherein the donor’s identity is not disclosed to the public.
“Political parties need access to money to reach out to the electorate, explain their goals or policies and receive inputs from people. But where do they collect their funds from? At present, political parties are not required to reveal the name of individuals or organisations giving less than Rs20,000. As a result, a substantial amount of funds cannot be traced and are from ‘unknown’ sources,” ADR says.
The unknown sources of political funding include donations via electoral bonds, sale of coupons, relief funds, miscellaneous income, voluntary contributions, and contributions from meetings or morchas. The details of donors of such voluntary contributions are not available in the public domain.
Total donations received by 25 regional parties in FY19-20 came to Rs803.24 crore, out of which Rs445.77 crore or over 55% was attributed to ‘unknown’ sources, ADR says, adding, “Of the donations from ‘unknown’ sources, Rs426.23 crore or 95.61% came from electoral bonds and Rs4.98 crore from voluntary contributions.”
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