Electoral bonds are a mode of funding to the political parties in India. This scheme was introduced during Union budget 2017-18.
The electoral bonds were introduced as a method of political financing by Indian government in 2018. Finance Ministry announced the official notification of the scheme, aiming to purify the political funding system. The idea behind these bonds is to diminish the impact of illegal funds in political activities, providing a legal and transparent channel for both individuals and companies to financially support political parties. Bonds are issued in various denominations, starting from Rs. 1 thousand and going up to Rs. 1 crore, and are available at selected branches of the SBI. Political parties can only redeem the electoral bonds through specific bank accounts assigned to them. The Electoral Bonds Scheme has faced criticism due to the anonymity of donors, hiding their identities from both the public and the Election Commission, which complicates the process of tracing the sources of political donations.
Challenges to the scheme:-
- Violating Right to Information
- Backdoor lobbying
- Can be used for other purposes than elections
- Promotes corruption
- Level playing field gets eliminated for Opposition
- Black money does not gets reduced
How Do Electoral Bonds Work?
Individuals and corporations can give electoral bonds by making payments from a bank account. The electoral bonds will not have the name of the payee.
It has a life of only 15 days, during which it can be used to make donations to political parties.
The electoral bonds given to political parties can only be encashed through selected bank accounts. The political parties should approach the election commission and file returns on the total electoral bonds they have received.
Who Can Purchase Electoral Bonds?
Any citizen of India and corporation established in India can purchase an electoral bond from the authorised SBI branches. It can be purchased individually or jointly with other individuals. However, purchases can be made through only KYC-compliant accounts to make donations to a political party.
Validity of Electoral Bonds:-
15 days from the date of issuance.
Benefits of electoral bonds:-
1. Electoral bonds must be redeemed by a bank account disclosed by the ECI, thus reducing malpractice.
2. Electoral bonds helps to hold back political parties which operates only to collect funds from the public since only registered parties attaining at least 1% of the votes in the general election can get funding.
3. Electoral bonds ensure the government’s goal to make election funding entirely online and safe.
4. Electoral bonds enhance transparency and accountability as political parties can redeem them through selected bank accounts.
5. Since electoral funds payments are made through online modes, DD or cheque, it discourages cash transactions and preserves donor anonymity.
Impact of electoral bonds on Indian democracy:-
Between 2017 and 2022, 7 national parties and 24 regional parties received a total donation of around 9,200 crore Rs. through electoral bonds.
In 2019-20 highest donations from electoral bonds i.e. Rs. 3,438.8237 crore were received. In year 2021-22 donations totalling Rs. 2,664.2725 crore were received through electoral bonds.