Context -

The Central Government has amended the Electoral Bond Scheme just weeks before elections in certain states.

An Electoral Bond Scheme -

Election Bonds:

Electoral bonds are money instruments similar to promissory notes that companies and individuals in India can purchase from the State Bank of India (SBI) and donate to a political party, which can encash these bonds.

The bonds can only be redeemed in a registered political party's designated account.

Individuals can purchase bonds on their own or in collaboration with other individuals.

Electoral Bond Program:

In 2018, the Electoral Bonds scheme was established to clean up political funding in India.

The primary goal of the electoral bonds scheme is to increase transparency in electoral funding in India.

The government described the scheme as an "electoral reform" in a country transitioning to a "cashless-digital economy."

What changes have been made to the scheme?

15-day extension:

  • Incorporated a new paragraph saying that the Central Government shall specify an extended term of fifteen days in the year of general elections to the Legislative Assembly of States and Union territories having Legislatures.
  • When the Electoral Bond Scheme was implemented in 2018, these bonds were made accessible for ten days in January, April, July, and October, as stipulated by the federal government.
  • The Central Government was to specify an additional 30 days in the year of the General Election to the House of People.


  • If an Electoral Bond is submitted after the validity period has expired, no payment will be paid to the payee Political Party.
  • The Electoral Bond in an eligible Political Party's account should be credited on the same day.


Political parties that are registered under Section 29A of the Representation of the People Act, 1951, and that received at least 1% of the votes cast in the most recent general election for the Lok Sabha, or the State Legislative Assembly are eligible to purchase Electoral Bonds.

What are the Issues with Electoral Bonds?

Contrary to its Fundamental Idea:

  • The main objection leveled at the electoral bonds system is that it does the exact opposite of what it was intended to do: increase transparency in election spending.
  • Critics, for example, maintain that the anonymity of electoral bonds applies primarily to the general people and opposition parties.

Extortion is a possibility:

  • Because such bonds are offered through a government-owned bank (SBI), the government may see who is backing its opponents.
  • As a result, the government of the day may either extort money, particularly from large corporations or victimize them for not backing the governing party, giving the party in power an unfair advantage.

A Defeat for Democracy:

  • By amending the Finance Act of 2017, the Union government has exempted political parties from disclosing contributions made through electoral bonds.
  • This implies that voters will have to learn who, what firm, or organization has supported which party and how much.
  • In a representational democracy, however, residents vote for the persons who will represent them in Parliament.

Compromise on the Right to Know:

  • The Supreme Court of India has long ruled that the "right to know,", particularly in the context of elections, is an inherent aspect of the Indian Constitution's right to freedom of speech (Article 19).

Opponents of Free and Fair Elections include:

  • The bonds disclose no information to citizens, but that does not apply to the government, which may always obtain donor information by requesting it from the State Bank of India (SBI).
  • The ruling government can use this information to undermine free and fair elections.

Crony Capitalism: 

  • The electoral bonds system eliminates all pre-existing constraints on political donations, thereby allowing well-funded firms to fund campaigns, opening the path for crony capitalism.
  • Crony Capitalism is an economic system distinguished by intimate, mutually beneficial connections between corporate executives and government officials.

The future Perspectives: 

  • Effective political funding regulation and radical changes are required to stop the vicious cycle of corruption and deterioration of democratic polity quality.
  • It is critical to close the gaps in present legislation to make the entire governing apparatus more responsible and transparent.
  • Voters can also assist in bringing about significant change by requesting public awareness campaigns. Democracy will advance if voters reject politicians and parties that overspend or bribe them.

Source: TH