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Title : ELECTORAL BONDS: High fund raisers for political parties

Date : Nov 29, 2021

Description :



Topic à Electoral related topics


  • Background:


  • The Supreme Court raised the prospect of political parties misusing funds gained through electoral bonds for other purposes, such as sponsoring terrorism or violent protests.
  • The court also inquired as to whether the government has any "control" over how these funds were spent by political parties.


  • About Electoral Bonds:


  • Electoral Bonds are a type of financial instrument that can be used to make payments to political parties.
  • The bonds are available in denominations of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, and Rs. 1 crore, with no upper limit.
  • The State Bank of India is authorised to issue and redeem these bonds, which have a fifteen-day validity period.
  • These bonds can be redeemed in a registered political party's designated account.
  • The bonds are available for purchase by any person (who is an Indian citizen or who is incorporated or founded in India) for ten days in each of the months of January, April, July, and October, as determined by the Central Government.
  • Individuals can purchase bonds either alone or collectively with other individuals.
  • The name of the donor is not included on the bond.


  • Benefits of Electoral Bonds:


  • Because it requires cheque and digital paper trails of transactions, the Electoral Bond Program provides as a check on traditional under-the-table donations. However, some major elements of the scheme make it highly controversial.


  • The Supreme Court Observed the Misuse of Electoral Bonds because of:


  • Anonymity: Neither the donor (who could be an individual or a corporation) nor the political party is required to disclose the source of the donation.
  • Asymmetry: Because the bonds are purchased through the State Bank of India (SBI), the government knows who the contributor is at all times.
  • This knowledge asymmetry has the potential to skew the process in favour of whichever political party is in power at the moment.
  • Blackmoney's Channel: The removal of a 7.5 percent cap on corporate donations, as well as the requirement that political contributions be disclosed in profit and loss statements and the need that a firm be three years old, undercuts the scheme's aim.
  • A shell company can anonymously donate an unlimited amount to a political party, providing a simple avenue for businesses to round-trip funds stashed in tax havens in exchange for a favour or advantage.


  • Government’s stand


  • Only parties registered under the Representation of the People Act 1951 were eligible to collect electoral bond donations, and they couldn't have received less than 1% of the vote in the previous election.
  • To Combat the Political Threat of Black Money: The Bonds include solely white money, as the payments are paid only by check or demand draught.
  • KYC requirements are also adhered to.
  • Support from the Election Commission of India (ECI): The ECI was not opposed to the bonds, but was concerned about the anonymity component.
  • It also urged the court not to halt the bonds, claiming that the programme is a step forward from the previous system of unaccountable cash funding.


  • Next Steps:


  • Effective political financing regulation, as well as radical reforms, are required to break the vicious cycle of corruption and deterioration of democratic polity quality.
  • To make the entire governance machinery more responsible and transparent, it is critical to close the gaps in current laws.
  • Voters can also have a role in bringing about significant changes by requesting public awareness campaigns. Democracy would advance a notch if voters rejected candidates and parties that overspend or bribe them.


  • Source à The Hindu à 29/11/21 à Page Number 3

Tags : election commission, political parties in india

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