Electoral bonds have become a hotly debated topic in India’s political landscape. Here is a comprehensive look at what exactly electoral bonds are, their purpose, how they work, the amounts raised so far, and the ongoing legal challenges surrounding them.
What Are Electoral Bonds?
Electoral bonds are financial instruments used to donate money to political parties in India. They are interest-free bearer bonds that can be purchased by any Indian citizen, company, or foreign entity. The bonds are anonymous in nature – the donor’s information is not disclosed to the recipient political party.
Electoral bonds were introduced by the Indian government in 2018 as part of electoral funding reforms aimed at increasing transparency and accountability in political donations. Previously, most political donations were made in unaccounted cash. Electoral bonds provide a legitimate channel for donations to be made through legal banking channels.
How Do Electoral Bonds Work?
Here is a step-by-step look at how the electoral bond process works:
- Electoral bonds are issued by the State Bank of India (SBI) in denominations ranging from ₹1,000 to ₹10 crore. They are available for purchase for 10 days at the beginning of every quarter from authorized SBI branches.
- During election years, an additional 30-day special electoral bond sale period is allowed.
- To purchase a bond, the buyer makes payment to SBI through a KYC-compliant account. No cash transactions are allowed.
- The bonds do not bear the name of the buyer or any other details – they are equivalent to bearer bonds.
- The buyer can then donate the electoral bonds to any eligible political party of their choice.
- The bonds are valid for 15 days, within which the political party has to deposit them into their verified bank account to redeem the value.
- The party’s receipt of funds through electoral bonds is accounted for in their audit reports to the Election Commission of India. However, their source remains anonymous.
Eligibility to Receive Electoral Bonds
For a political party to be eligible to receive electoral bond donations, they must meet the following criteria:
- It must be registered under Section 29A of the Representation of the People Act, 1951.
- It should have received at least 1% of the votes polled in the last general election to the Lok Sabha or legislative assembly.
Most national and regional parties qualify under these criteria. As of 2022, donations can be made to 42 political parties through electoral bonds.
Amount of Money Raised Through Electoral Bonds
Since their inception, electoral bonds have emerged as the most popular channel for political donations in India. Here’s a look at the total value of electoral bonds sold so far:
- 2018-19: ₹1,407 crore
- 2019-20: ₹1,398 crore
- 2020-2021: ₹3,429 crore
- 2021-2022: ₹5,848 crore
- 2022-23 (so far): ₹2,055 crore
Total since 2018: ₹14,137 crore
The ruling Bharatiya Janata Party has been the biggest beneficiary, receiving over 50% of the total electoral bonds purchased so far.
Ongoing Legal Challenges
While the government touts electoral bonds as an upgrade over opaque cash donations, critics argue they undermine transparency in political funding.
Several public interest litigations have been filed in the Supreme Court challenging electoral bonds on grounds that anonymous donations violate the citizen’s right to know the source of political funding.
The Supreme Court has heard extensive arguments from both sides over multiple hearings. It is currently reserving judgment on whether electoral bonds require additional safeguards and transparency measures to enhance accountability.
The outcome of the case will have far-reaching impacts on how elections in India are funded. Many expect the current electoral bond structure to be modified based on the principles laid out in the eventual Supreme Court verdict.
The Road Ahead
Electoral bonds have opened the floodgates to unlimited political donations just as India is poised for a series of major state elections in 2023 followed by the 2024 Lok Sabha polls. Reports indicate nearly ₹10,000 crore worth of bonds may be purchased in the coming months.
This will likely intensify public scrutiny and calls for transparency around donors. The Supreme Court verdict will be closely watched to see if the judiciary mandates any changes. Irrespective of the outcome, electoral funding will remain a fiercely debated issue as Indian democracy prepares for its next big electoral test.
