Editorial Notes

Electoral Reforms: What are the drawbacks?

Electoral reforms announced in the Budget are not what they are claimed to be — they will neither cleanse our politics nor bring transparency.
By IT's Editorial Board
February 16, 2017


GS (M) Paper-2: “Salient features of the Representation of People’s Act.”
GS (M) Paper-2: “Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.”


Electoral Reforms: What are the drawbacks?


Instead of bringing transparency and accountability, the Finance Minister’s proposal in Budget on electoral reforms will bring in just the opposite.

The four elements of Electoral reforms:

The four elements of Electoral reforms were announced to “cleanse the system of funding of political parties”, while also preventing the generation of black money. They are:


  1. A political party can receive RS.2000 as donation from one person in a year.
  2. Political parties would be “entitled to receive” donations by cheque or by digital mode from their donors.
  3. New scheme of electoral bonds.
  4. Every political party would have to file its income tax return within the prescribed time limit in order to enjoy exemption from payment of income tax.

What are the drawbacks?

  • The second and the third scheme are redundant as they pre-exist in the laws.
  • It was already mentioned that the parties are to receive the donations by cheque or digitally and that the income tax should be filed within a stipulated time but it is routinely flouted. So far, all the major parties have never followed this condition. But, no one gets penalised for this non-compliance.
  • As for the first scheme, the existing limit of Rs. 20,000 on anonymous donation as per Section 23 of the representation of the people act (RPA) has been left untouched. The Minister has merely proposed an additional clause that limits cash donations from one source to Rs. 2000 a year. Therefore, there is no limit to how much a party can receive from anonymous donations.
  • The EC had proposed that no party should be allowed to receive more than RS. 20 crore or 20% of its overall donations from anonymous sources which the minister has ignored.
  • Regarding the new scheme of electoral bonds, they will be like bearer bonds and will not contain the name of the eventual beneficiary. These bonds shall be redeemable only in the designated account of a registered political party within a prescribed period.
  • Thus, the income tax authorities and the EC would not know anything about the reporting of the donor, beneficiary or even the amount of contribution. No one except the fund receiver and the fund giver would know about this exchange done in white money with full tax exemption.
  • With the introduction of these new schemes the existing transparency is also believed to dry up. This is considered as a great leap backwards in the history of election funding reforms.

What are the Electoral Bonds?


  • 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 act 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.
[Ref: The Hindu]


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