What is electoral bond

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16 Mar, 2024

What is electoral bond

What is electoral bond

Electoral bonds serve as a means for individuals and corporate entities to donate to political parties anonymously. Introduced in 2017 with the aim of enhancing transparency in political funding, the scheme allows donors to purchase bonds from the State Bank of India (SBI) in various denominations. These bonds can then be handed over to any political party for encashment, without the need for the parties to disclose the identity of the donor, even to the Election Commission of India (ECI).

Critics have condemned the scheme for fostering a lack of transparency, leading to what they describe as an "information black hole" and prioritizing opacity. In a significant development, the Supreme Court declared the scheme unconstitutional in February 2024, citing concerns about voters' right to know about party financing.

Electoral bonds are available for purchase during specific periods throughout the year, typically lasting for 10 days each in January, April, July, and October, as determined by the Central Government. In addition, an extra 30-day period is designated in the year of the General election to the House of People. Failure to encash the bonds within the prescribed 15-day period results in neither the donor nor the receiving political party receiving a refund. Instead, the fund value of the electoral bond is directed to the Prime Minister Relief Fund.

Electoral bonds, introduced in 2017, allow anonymous donations to political parties. Recently ruled "unconstitutional," they raised concerns about transparency. Bonds were purchased from State Bank of India (SBI) in fixed denominations and handed to parties without disclosing donors' identities. Here's an in-depth look at the electoral bond scheme:

1. Introduction:

Electoral bonds provide anonymity to donors, aiming to ensure impartial political funding.

2. Legal Framework:

Enacted via the Finance Act, 2017, to enhance transparency in political funding. However, criticisms arose regarding fund source transparency.

3. Eligible Parties:

Only parties registered under Section 29A of the Representation of the People Act, 1951, with at least 1% of votes in the last General Election, could receive electoral bonds.

4. Fund Disbursement:

Parties had to encash bonds within a stipulated timeframe; failure led to funds being deposited into the Prime Minister's Relief Fund.

5. Denominations:

Bonds were available in denominations from ₹1,000 to ₹1 crore.

6. Availability:

Purchasable during specified periods, four times a year, and an additional 30 days in election years.

7. Validity:

Bonds expired in 15 days.

8. Transparency Concerns:

Despite government claims, the lack of donor identity disclosure raised concerns about corruption and undue influence.

9. Impact:

Electoral bonds significantly changed political funding methods, becoming a preferred mode for donations.

10. Future of Political Funding:

Parties can still collect donations directly or through electoral trusts, with limitations on value and anonymity. Critics argue loopholes remain for concealing donors and evading expenditure limits.

The Supreme Court's decision has brought attention to the need for reform in political funding to ensure transparency and accountability.

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What is electoral bond