Manila: Electoral bonds may be emerging as a key instrument for financing elections as regulatory agencies strengthen efforts to prevent instances of cash hoarding.

Department of economic affairs secretary Subhash Garg said the response to the electoral bonds scheme has been good so far.

“In last two tranches, bonds worth about Rs320 crore have been sold. It does indicate that the system is succeeding," Garg said in an interview on the sidelines of Asian Development Bank’s annual board of governors’ meeting here.

State Bank of India, which is designated to sell electoral bonds, has come out with two tranches so far in March and April after the government notified the scheme in January in a bid to formalize election funding through the banking system. Electoral bonds are seen as a more formal and transparent alternative to cash donations to political parties.

In the wake of cash shortage being reported in several states, investigating agencies have been taking steps to prevent cash hoarding. The income tax department recently stepped up surveillance, including in the poll-bound state of Karnataka, to nab cash hoarders who carry out bogus transactions to generate unaccounted for funds. The department is now combing through the books of several contractors to see if the expenses reported in the fourth quarter of 2017-18 are unreasonably above that of the previous corresponding quarter.

Experts said that electoral bonds have made a promising beginning in the effort to formalize election funding, but more needs to be done. “Electoral bonds are a step forward. But all political parties must put their heads together to usher in more transparency in election funding," said A.K. Verma, a political analyst and professor at Christ Church College in Kanpur. Verma said that one key concern is that, in the absence of a totally transparent election funding process, it is very difficult for a common man to enter politics.

Registered political parties that have secured not less than 1% of votes polled in the previous election to the Lok Sabha or a legislative assembly are eligible to receive electoral bonds.

Garg said the cash availability situation has stabilized now and in last four to five days, no cash shortage has been reported from anywhere in the country. “Enough cash is being supplied. There is extra demand, which is also being fully met," he said.

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