Electoral bonds are a financial instrument introduced by the BJP government in 2018 as an alternative to cash donations for political parties. These bonds allow individuals and businesses to donate money to political parties without declaring it publicly. The primary goal was to enhance transparency in political funding1.
Here’s how electoral bonds work:
- They are interest-free bearer bonds or monetary instruments.
- Individuals and companies in India can purchase these bonds from authorized branches of the State Bank of India (SBI).
- The bonds are available in various denominations: Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore2.
The controversy surrounding electoral bonds lies in the anonymity they provide to donors. Critics argue that this lack of transparency undermines democratic processes. However, supporters believe that these bonds facilitate legitimate political funding while maintaining donor privacy1.
Recently, the Election Commission of India disclosed data on electoral bonds provided by the SBI. The information includes details about donors linked to unique alphanumeric bond numbers and the political parties that have encashed these bonds34.
In summary, electoral bonds serve as a financial channel for political contributions, but their impact on transparency and accountability remains a subject of debate.
How do political parties use these bonds?
Political parties use electoral bonds as a means to receive financial contributions from individuals and corporations. Here’s how they typically utilize these bonds:
Fundraising: Political parties receive electoral bonds from donors who purchase them from authorized banks. These bonds serve as a way for donors to contribute money without revealing their identity publicly.
Encashment: Once a political party receives electoral bonds, it can encash them at authorized bank branches. The funds are then transferred to the party’s account.
Campaign Expenses: The funds obtained through electoral bonds are often used for election campaigns, rallies, advertisements, and other political activities. These expenses play a crucial role during elections.
Party Operations: Electoral bonds contribute to the day-to-day functioning of political parties. They help cover administrative costs, salaries, and other operational expenses.
Transparency Challenges: Critics argue that the anonymity provided by electoral bonds undermines transparency. Since the donor’s identity remains undisclosed, it becomes difficult to track the source of funds.
