The State Bank of India charged the Indian government Rs 13.5 crore for expenses related to managing the Electoral Bonds Scheme, which enables anonymous tax-free funding of political parties. Electoral bonds allow anonymous donations to registered political parties in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. While donors are not charged, the government or taxpayers ultimately bear the management expenses. Economists argue that electoral bonds create asymmetry of information and impose costs on taxpayers.
The State Bank of India charged the Indian government Rs 13.5 crore for expenses related to managing the Electoral Bonds Scheme, which enables anonymous tax-free funding of political parties. Electoral bonds allow anonymous donations to registered political parties in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. While donors are not charged, the government or taxpayers ultimately bear the management expenses. Economists argue that electoral bonds create asymmetry of information and impose costs on taxpayers.
The State Bank of India charged the Indian government Rs 13.5 crore for expenses related to managing the Electoral Bonds Scheme, which enables anonymous tax-free funding of political parties. Electoral bonds allow anonymous donations to registered political parties in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. While donors are not charged, the government or taxpayers ultimately bear the management expenses. Economists argue that electoral bonds create asymmetry of information and impose costs on taxpayers.
The State Bank of India charged the Indian government Rs 13.5 crore for expenses related to managing the Electoral Bonds Scheme, which enables anonymous tax-free funding of political parties. Electoral bonds allow anonymous donations to registered political parties in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. While donors are not charged, the government or taxpayers ultimately bear the management expenses. Economists argue that electoral bonds create asymmetry of information and impose costs on taxpayers.
government Rs 13.5 crore for expenses related to manage the Electoral Bonds Scheme, which enables anonymous tax-free funding to political parties.
While donors are not charged any
service fees or printing costs, the government or taxpayers ultimately bear these expenses. What’s Electoral Bonds?
The electoral bonds is a financial
instrument introduced in 2017 and implemented in 2018 to allow anonymous donations to registered political parties.
Features Authorized Issued by : State Bank of India Denominations: Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. Purchased by : Indian citizens or entities established in India. Benefit to the bearer? Electoral bond donations made by individuals or entities are tax-exempt under Section 80GG and Section 80GGB under the Income Tax Act, 1961.
Benefit to Political parities?
The Electoral Bond Scheme allows political
parties in India to receive donations through formal banking channels, reducing dependence on cash donations and protecting against harassment or intimidation. The Introduction of Electoral Bonds: Reason?
The introduction of electoral bonds was a part of the
government’s initiative to reform the system of political funding in India and to curb the use of black money and corruption in elections.
Government has to encash the bonds donation
within 15 days of issue otherwise it move into PM Relief Fund.
A transparent and legal mechanism for individuals and
entities to contribute to political parties without disclosing their identity or influence
Sounds good: what Economics says?
Economics Perspective
Electoral bonds create the problem of
asymmetry of information.
How?
Electoral Bonds allow the donors to hide their
identity and influence from the public and the political parties, but not from the government. The government, through the State Bank of India (SBI), may track the source and destination of the electoral bond transactions.
Hence This might give the government an unfair advantage over the opposition parties and the voters, as it may use this information to favour the donors or the parties. Economics Perspective The scheme creates a negative externality. A situation where a market transaction creates a cost or a benefit for a third party who is not involved in the transaction.
In this case, the transaction is between
the donor and the political party, and the third party is the tax-payer.
The electoral bond scheme imposes a cost
on the tax-payers, who have to fund the government resources and personnel that are involved in running and regulating the scheme. The End Note The Indian government is starting the 30th round of electoral bond sales on January 2nd under the electoral bond scheme, 2018, to cleanse the political funding system. The scheme is currently being examined by the Honourable Supreme Court of India.
