Print Friendly, PDF & Email

Electoral bond scheme

Topics Covered:

  1. Parliament and State Legislatures – structure, functioning, conduct of business, powers &amp; privileges and issues arising out of these.


Electoral bond scheme


What to study?



Context: Govt. defends electoral bonds scheme in SC.


What’s the issue?

A petition has been filed in the Supreme Court seeking to strike down the ‘Electoral Bond Scheme 2018’ and amendments in the Finance Act, 2017, which allow for “unlimited donations from individuals and foreign companies to political parties without any record of the sources of funding.”


How govt defends its move?

  • Electoral bonds have been introduced to promote transparency in funding and donation received by political parties.
  • The scheme envisages building a transparent system of acquiring bonds with validated KYC and an audit trail. A limited window and a very short maturity period would make misuse improbable.
  • The electoral bonds will prompt donors to take the banking route to donate, with their identity captured by the issuing authority. This will ensure transparency and accountability and is a big step towards electoral reform.


About Electoral bonds:






How will the Bonds help?

The previous system of cash donations from anonymous sources is wholly non-transparent. The donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed.

  • According to government the system of Bonds will encourage political donations of clean money from individuals, companies, HUF, religious groups, charities, etc. After purchasing the bonds, these entities can hand them to political parties of their choice, which must redeem them within the prescribed time.


Concerns expressed:

  • The move could be misused, given the lack of disclosure requirements for individuals purchasing electoral bonds.


Sources: the hindu.

Mains Question: Critically examine the effectiveness of electoral bonds in ensuring transparent political funding and suggest alternatives?