Electoral Bonds


In a landmark unanimous Judgment the Supreme court stuck down as Unconstitutional and manifestly arbitrary and the electoral bonds scheme which provides blanket anonymity to political donors as well as critical legal amendments allowing rich amendments allowing rich corporations to make unlimited political donations.


Electoral bonds are financial instruments introduced in India in 2018 as a means of political funding. They were introduced by the Government of India to bring about greater transparency and accountability in political funding.

Here's how electoral bonds work:

  1. Issuance: Electoral bonds are issued by notified banks for specified denominations, ranging from 1,000 rupees to 10,000,000 rupees (approximately $14 to $140,000 as of February 2024).
  2. Purchase: Any Indian citizen or body incorporated in India can purchase electoral bonds from specified branches of notified banks after complying with the requirements of providing KYC (Know Your Customer) details.
  3. Donation to Political Parties: These bonds can be donated to registered political parties in India. The political parties can encash these bonds within a specified period from the issuance date.
  4. Anonymity: One key feature of electoral bonds is that they are anonymous, meaning the identity of the donor is not disclosed to the public or to the receiver (political party).
  5. Transparency: Despite the anonymity of donors, electoral bonds are considered to bring more transparency compared to cash donations, as the transactions occur through banking channels and are recorded.
  6. Validity and Expiry: Electoral bonds are valid for a specified period, typically 15 days, during which they can be used for making donations to political parties. If not used within this period, they become invalid.

Critics of electoral bonds argue that the anonymity they provide could lead to the potential for unaccounted money entering political funding, undermining transparency and accountability. However, proponents argue that electoral bonds offer a formal channel for political funding, reducing the influence of black money and promoting transparency compared to cash donations.

The use and regulation of electoral bonds have been subjects of debate and legal challenges in India, with concerns raised about their impact on electoral transparency and accountability.

Implications of Electoral Bonds

Electoral bonds have several implications, both positive and negative, for the political and financial landscape of a country. Let's explore some of these implications:

  1. Transparency vs. Anonymity: Electoral bonds provide a degree of transparency by channeling political donations through formal banking channels. However, the anonymity of donors raises concerns about accountability and the potential for undisclosed or illicit funds to influence the political process.
  2. Reduced Cash Transactions: Electoral bonds aim to reduce the use of cash in political funding, which can help mitigate the flow of black money and promote a more transparent financial system. By formalizing the donation process, they contribute to the formalization of the economy.
  3. Increased Corporate Influence: Critics argue that electoral bonds may amplify the influence of corporate entities in politics, as they provide a legal and anonymous means for corporations to contribute to political parties. This raises concerns about the disproportionate influence of wealthy donors on the political process.
  4. Impact on Political Parties: Electoral bonds can have significant financial implications for political parties. Parties that have traditionally relied on cash donations may need to adapt to the new system, while those with access to corporate donors may benefit from increased funding.
  5. Regulatory Challenges: Implementing and regulating the use of electoral bonds requires a robust legal and regulatory framework. Ensuring compliance with transparency and accountability standards, as well as preventing misuse or abuse of the system, poses challenges for regulatory authorities.
  6. Public Perception and Trust: The use of electoral bonds can influence public perception and trust in the political process. Transparency measures such as disclosing donations received through electoral bonds can enhance public trust, while concerns about anonymity and potential misuse may erode trust in the electoral system.
  7. Legal and Political Debate: The introduction of electoral bonds often sparks legal and political debates about the balance between transparency and privacy in political funding, as well as the broader issues of campaign finance reform and corporate influence in politics.

Overall, electoral bonds have far-reaching implications for political finance, corporate influence, transparency, and accountability in the electoral process. Their impact depends on various factors, including the regulatory framework, public perception, and the behavior of political parties and donors.

Cons of Electoral Bond

While electoral bonds aim to bring transparency and accountability to political funding, they have faced criticism and raised concerns due to several perceived drawbacks. Here are some of the cons of electoral bonds:

  1. Anonymity of Donors: One of the most significant criticisms of electoral bonds is the anonymity they afford to donors. While this anonymity is intended to protect donors from potential reprisals or harassment, it also raises concerns about transparency and accountability. Without knowing the identity of donors, it becomes challenging to track and scrutinize potential conflicts of interest or undue influence on political parties.
  2. Potential for Abuse: The anonymity of electoral bonds opens the door to potential abuse and misuse. Critics argue that this anonymity can be exploited by individuals or entities with vested interests, including corporations, to influence political parties and policies without public scrutiny. There are concerns that electoral bonds could facilitate the laundering of black money into political donations.
  3. Lack of Public Disclosure: While political parties are required to disclose donations received through electoral bonds to the Election Commission of India, this information is not made available to the public in real-time. Critics argue that this lack of real-time disclosure undermines transparency and limits public oversight of political funding.
  4. Corporate Influence: Electoral bonds have been criticized for potentially increasing the influence of corporate entities in politics. The anonymity of donors and the high denominations of electoral bonds make them an attractive option for corporate donors to contribute to political parties without public scrutiny. This raises concerns about the disproportionate influence of wealthy donors on the political process.
  5. Exclusion of Small Donors: Electoral bonds are typically purchased in high denominations, which may exclude small donors from participating in the political funding process. This could limit the diversity of donors and result in a concentration of political funding from wealthy individuals and corporations, further exacerbating inequalities in political influence.
  6. Legal and Regulatory Challenges: The implementation of electoral bonds has been accompanied by legal and regulatory challenges. Critics argue that the lack of comprehensive regulations and oversight mechanisms increases the risk of abuse and undermines the effectiveness of electoral bonds in promoting transparency and accountability.

Overall, while electoral bonds aim to address the challenges of political funding transparency, they have been met with criticism and concerns regarding their potential for abuse, lack of public disclosure, and the disproportionate influence of corporate donors. These drawbacks highlight the complexities and challenges of reforming political finance systems to ensure transparency, accountability, and fairness in the electoral process.

Posted by on 19th Feb 2024