Government introduces alternative funding mechanism of electoral bonds: Budget

Posted on:03 Feb 2017 18:02:25
Government introduces alternative funding mechanism of electoral bonds: Budget
03 February 2017 Current Affairs: The Union Government has announced two measures in the Budget 2017-18 to bring in greater transparency in funding of political parties. These include capping cash funding by a single anonymous donor to Rs. 2000 (one tenth of the current limit of Rs 20,000) and introduction of the electoral bonds. It will take effect from 1 April, 2018.

The finance bill lays out the way ahead for capping cash funding and sale of electoral bonds by proposing amendments in the section 13A of the Income-Tax Act, 1961 and to Reserve Bank of India Act, 1934.

The amendment to I-T Act will provide political party exemption if the donation not exceeding Rs. 2,000 is received through instruments such as cheque, draft, electronic clearing system or electoral bond. The amendment of RBI Act will facilitate introduction of electoral bonds.

 These bonds will be instrument to donate money to political parties and the RBI will acts as the intermediary. Donors can purchase bonds only through cheque or digital mode, helping to track record of the source of the purchase. 

These bonds shall be redeemable only in the designated account of a registered political party and within the prescribed time limit from issuance of bond. The bond bearer’s identity will be unlikely revealed in the books of the political party and the recipient party will also remain unknown.

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