Electoral bonds (EBs) are financial instruments used to donate money anonymously to political parties in India. Introduced in 2018, they allow donors to contribute funds to parties while keeping their identities hidden. However, critics have raised concerns over transparency and scope for misuse.
Key Features
Some key features of electoral bonds are:
- Bearer bonds for anonymous political donations
- Issued in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore
- Valid for 15 days from issue date
- Redeemable only by registered political parties
- Available for purchase for 10 days in months of January, April, July and October
- Purchased from specified branches of State Bank of India
Objectives Behind Usage of Electoral Bonds
The key objectives cited for introducing electoral bonds were:
- Anonymity to donors: Identities not recorded on bonds
- Prevents: Unaccounted or black money donations
- Streamline political funding: Purchase allowed only via banking channels
- Ensures: Only registered parties receive funding via redemption
Key Statistics and Details
Key Statistics on Electoral Bonds
| Parameter | Statistics |
| Total EBs issued since 2018 | Bonds worth ₹21,959 crore |
| Maximum in a single tranche | ₹5,000+ crore (in May 2023) |
| Share encashed by national parties | Over 95% |
| BJP’s share in encashments | More than 60% |
| Dec 2022 encashments data | Yet to be made public |
Concerns and Issues Raised
Despite the cited benefits, some concerns raised over electoral bonds include:
- Enable anonymous donations – reduced transparency
- Dominated by rich donors and corporate houses
- Tilted donations heavily towards the party in power
- May promote quid pro quo deals and crony capitalism
- Bypass RBI and increase use of black money
Supreme Court Hearings
The Supreme Court has heard multiple petitions on electoral bonds raising issues of transparency, fairness and misuse of power. Key developments include:
- In April 2019, SC directed parties to submit details of EB donations to Election Commission in sealed cover
- EC studies showed disproportionate donations to ruling party
- April 2022, SC upheld amendments enabling EBs as legal
- But in August 2022 raised concern on opaqueness and misuse risks
The next hearing is scheduled for end February 2024 with possibility of renewed scrutiny and additional measures directed.
Amendments Made
The original electoral bond scheme under 2017 Finance Act has undergone amendments including:
- Removal of 28 days validity so bonds never expire
- Enabling bonds to be encashed multiple times
- Removing restriction on number of bonds an entity can purchase
- Increasing purchase periods from 2 months to 4 months
These amendments in 2023 have raised more concerns from critics due to reduced safeguards.
Global Context
India’s EB scheme permitting anonymous funding contrasts practices of democracies globally:
- About 70 countries prohibit anonymous donations
- Capping cash donations common – e.g. $2000 in Australia
- Disclosure norms stricter including in US, UK, European Union
- Canada prohibits all corporate and union donations
This indicates India adopting unusually high opacity with EBs amid global trends for transparency.
Suggestions and Demands
Suggestions from critics demanding electoral reform include:
- Apply tax when redeemed to reduce disproportionate corporate donations
- Provisions for disclosing donors and amounts for values above a threshold
- Making EB transaction details available more frequently than annual
- Audits to track pattern, especially encashments spiking around elections
- Reduce maximum bond denomination from ₹1 crore
The Supreme Court verdict on ongoing case in early 2024 will be crucial for the future shape of funding to political parties via electoral bonds. Most critics have called for mechanisms enabling greater transparency and accountability around donors to uphold democratic principles.
Last Modified: February 16, 2024