The Impact of Electoral Bonds on Political Funding in India. Part-1

What is an Electoral Bond?

An electoral bond is a financial instrument that was introduced in India in 2018 as a way to make political funding more transparent. It is a type of promissory note that can be purchased by individuals or organizations from authorized banks. These bonds can then be donated to registered political parties.

How Does an Electoral Bond Work?

Electoral bonds are available in various denominations, ranging from Rs. 1,000 to Rs. 1 crore. They can be purchased by any citizen of India or a body incorporated in India. The bonds are issued by authorized banks and are valid for 15 days from the date of issuance.

Once a bond is purchased, it can be donated to any registered political party. The bonds can only be encashed by the political parties in their designated bank accounts. The identity of the donor is kept confidential, ensuring privacy and preventing any direct link between the donor and the political party.

Impact of Electoral Bonds on the Indian Government

The introduction of electoral bonds has had a significant impact on the Indian government and its political landscape. Here are some of the key effects:

1. Transparency in Political Funding

One of the primary aims of electoral bonds was to bring transparency to political funding. Previously, political parties relied heavily on anonymous cash donations, which made it difficult to track the source of funds. Electoral bonds provide a traceable paper trail, making it easier to monitor and regulate political funding.

2. Increased Corporate Influence

While electoral bonds were introduced to curb black money and anonymous donations, there have been concerns about the increased influence of corporations on political parties. Since corporate entities can purchase electoral bonds, there is a fear that it may lead to favoritism and policy decisions influenced by corporate interests.

3. Privacy of Donors

The provision of keeping the identity of the donor confidential has been a subject of debate. While it ensures privacy and protects individuals and organizations from potential backlash, critics argue that it hampers transparency and accountability in the political system.

4. Lack of Public Scrutiny

Electoral bonds are not subject to public scrutiny as the details of the donors and the political parties receiving the bonds are not made available to the public. This lack of transparency has raised concerns about the potential for misuse and corruption in political funding.

5. Legal Challenges

The introduction of electoral bonds has faced legal challenges in India. Several petitions have been filed in the Supreme Court, questioning the validity of electoral bonds and their impact on the democratic process. The court is yet to make a final decision on the matter.

Conclusion

Electoral bonds were introduced as a means to bring transparency to political funding in India. While they have achieved some level of accountability, there are concerns about the increased influence of corporations, lack of public scrutiny, and the privacy of donors. The impact of electoral bonds on the Indian government continues to be a subject of debate, and it remains to be seen how the system evolves in the future.