What Is Electoral Bonds

Electoral bonds are financial instruments that were introduced in India in 2018 as a way to make political funding more transparent. These bonds are essentially a bearer instrument, similar to a promissory note, that can be purchased by any Indian citizen or entity incorporated in India. The main purpose of electoral bonds is to eliminate the anonymity of political donations and bring transparency to the funding of political parties.

Here’s how electoral bonds work:

  1. Purchase: Any eligible entity or individual can purchase electoral bonds from specified branches of authorized banks. These bonds are issued in multiples of ₹1,000, ₹10,000, ₹1,00,000, ₹10,00,000, and ₹1,00,00,000.
  2. Anonymity: The identity of the donor is kept anonymous during the purchase of electoral bonds. The donor can buy these bonds and donate them to the political party of their choice.
  3. Redemption: Political parties can encash these bonds only through designated bank accounts within a specified period. The bonds need to be deposited in the party’s account within 15 days of their issuance.
  4. Transparency: While the identity of the donor remains anonymous, the political parties need to disclose the amount of electoral bonds received in their balance sheets. This brings a level of transparency to political funding, as the amount received through electoral bonds becomes a matter of public record.
  5. Legal Framework: The issuance and redemption of electoral bonds are governed by a specific legal framework laid down by the Government of India. The Electoral Bond Scheme provides detailed guidelines regarding the purchase, encashment, and reporting requirements related to these bonds.

The introduction of electoral bonds aimed to address concerns about the opacity of political funding in India by providing a structured and accountable mechanism for political donations. However, critics argue that the anonymity of donors undermines the transparency goals of the system, as it still allows for undisclosed corporate influence on political parties.