Electoral Bonds Cannot Become Parallel Currency, Arun Jaitley Says
The government wants to keep a check on the instruments being used for money laundering.
Electoral bonds cannot be treated as parallel currency and will be valid for a limited duration in order to keep a check on money laundering, Finance Minister Arun Jaitley said Wednesday. To that effect, these bonds will have to be redeemed within three-four weeks of purchase, in only one bank account of a political party, he added.
"Why do we take this precaution? Knowing the manner in which people have laundered money, a bond should not become a parallel currency, so that people start transacting in bonds. It will only be available for a few days," he said at a panel discussion in New Delhi.
The scheme for such bonds will be put into force by adding a section in the Income Tax Act, 1961, and will be notified once the Finance Bill is passed, the finance minister said. He urged political parties to start campaigns to encourage people to make political donations through digital payments.
The Union Budget 2017-18 had proposed issuance of electoral bonds in an effort to bring transparency to political funding, which was largely done via cash transactions earlier. The finance minister had announced in his Budget speech that political parties won’t be allowed to accept cash donations of over Rs 2,000 and all donations above that amount would be made by cheque, digital payments, or through electoral bonds.
The recipient political party will have to redeem these bonds, which are likely to function as a promissory note and not an interest-paying debt instrument, in only one of its bank accounts. The party will also have share all these details with the Election Commission.
The issue of cash political funding had come under a scanner after the government decided to scrap old 500 and 1,000 currency notes in November last year, as it was alleged that people could use this avenue to anonymously launder black money.
Jaitley also pitched for conducting state Assembly and Lok Sabha elections together, saying this would reduce the expenditure of political parties significantly.
“If Lok Sabha and state assembly elections are conducted together, the campaigns will be common, and in a common campaign, I think the money spent will be much less… I think besides money it will also improve the quality of governance…If you have divided elections…therefore the government’s energy of both centre and state government is diverted,” he said.
Polls were recently concluded in five states, including Uttar Pradesh and Punjab.