How Do Electoral Bonds Work, and Why They Face criticism?


The Supreme Court picks out the possibility of abuse of funds entered by political parties through electoral bonds. First, let’s understand the scheme in detail and why it’s under fire.

The electoral bond is refers as economic tool used for making donations to political parties. A political party eligible to run movement must register in the Representation of the People Act, 1951, under Section 29A. The electoral bond is a messenger instrument like a promissory note, outstanding to the deliverer on demand. It’s an interest-free instrument.

The electoral bonds are issued in multiples of Rs 1000, Rs 10,000, Rs 1 lakh, and Rs 1 Crore without any maximum limit. State Bank of India is authorized to issue and revalue these bonds, which are valid for fifteen days from the date of allocation.

When were Electoral Bonds introduced?

The Electoral Bonds were launched with the Finance Bill (2017). On January 29, 2018, the Narendra Modi- led NDA government announced the Electoral Bond Scheme 2018.

How does the Electoral Bond Scheme Work?

Any Indian commercial body, registered agency, or concentrated Hindu family can issue electoral bonds by giving finances to the political parties as per their choice.
The political parties admit the Electoral Bonds issued by the public or pots. Thus, the political parties anticipate to approach the electoral commission to file returns on their total electoral bonds.

Why have Electoral Bonds Attracted Criticism?

Contradicting its Introductory Idea

The primary criticism of the electoral bonds scheme is that it does the exact opposite of what it is meant to do, which is to bring transparency to election backing.

A Blow to Democracy

Through a modification to the Finance Act 2017, the Union Government has exempted political parties from evincing donations entered through electoral bonds.

Compromising Right to Know

The Indian Supreme Court has long held that the “right to know”, especially in choices, is integral to the right to freedom of expression under the Indian Constitution.

Crony Capitalism

The electoral bonds scheme removes all pre-existing limits on political donations and effectively allows well- resourced pots to fund choices, recently paving the way for crony capitalism.

Are Electoral Bonds Taxable?

In 2017, former finance minister Arun Jaitley said that the donations would be tax-free. Hence, a patron will get a subtraction and a recipient, or the political party, will get taxable, provided returns are submit by political party.

The objective of converting electoral bonds is to move them toward transparency regarding the sources of political backing. In addition, this scheme offers the stylish way to cover the patron’s rights while making donations digitally through electronically issued bonds.


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