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Electoral Bonds- UPSC Current Affairs

Apr 08, 2022


Upgrade your UPSC CSE preparation with our Current Affairs Dialog box, wherein we discuss topics that are crucial from the CSE point of view. In today's edition, we will discuss Electoral Bonds as they form an integral part of the UPSC exam preparation.

Below-listed are the study areas that are relevant from the Prelims and Mains point of view preparation.

For Prelims: Indian Polity and Governance-Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues, etc.

For Mains: Salient Features of the Representation of People’s Act

Click here to read yesterday's edition of the Current Affairs Dialog box.

Why in the News?

Recently, the Chief Justice of India has assured petitioners that the Supreme Court will take up for hearing a pending plea challenging the Electoral Bond Scheme, 2018. 

Probable Question

Electoral Bonds violate the ‘right to know’ of citizens and voters and thus jeopardize the spirit of electoral reforms. Comment       

Key Points

What are Electoral Bonds?

  • The Finance Bill, 2017 introduced “Electoral bonds” as interest-free bearer instruments (like Promissory Notes).
  • Electoral bonds are an instrument through which anyone can donate money to political parties. 
  • The bonds are issued by SBI in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore.
  • The Political parties can choose to encash such bonds within 15 days of receiving them and fund their electoral expenses.
  • These can be redeemed only by an eligible party by depositing them in its designated account maintained with a bank.
  • SBI is the only authorized bank to issue such bonds.
Electoral Bonds

Image Source: The Financial Express

Eligibility of Political Parties

  • Every party that is registered under Section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has secured at least one percent of the votes polled in the most recent Lok Sabha or State election will be allotted a verified account by the Election Commission of India.
    • Electoral bond transactions can be made only via this account.
  • The Bonds will be available for purchase for a period of 10 days each at the beginning of every quarter, i.e., in January, April, July, and October as specified by the Central Government. 
  • An additional period of 30 days shall be specified by the Central Government in the year of the Lok Sabha elections.


  • Anonymity & Unfair advantage to the party in Power:
    • Critics argue that the anonymity of electoral bonds is only for the broader public and opposition parties. 
    • As these bonds are sold via a government-owned bank (SBI) leaves the door open for the government to know exactly who is funding its opponents.
    • This, in turn, provides an unfair advantage to the party in power. 
  • Violation of ‘Right to Know’: Funding through Electoral Bonds violates the basic tenets of India’s democracy by keeping the knowledge of the ‘right to know’ from citizens and voters
  • Institutionalizing Corruption: As the electoral bonds scheme allows even foreign donations to political parties (which can often be made through shell companies) the prospects of institutional corruption (including by foreign sources) increase with the electoral bonds scheme, instead of decreasing.

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What does the Election Commission think of electoral bonds?

  • The Election Commission, in its submission to the Standing Committee on Personnel, Public Grievances, Law and Justice in May 2017, had objected to the amendments in the Representation of the People (RP) Act, which exempt political parties from disclosing donations received through electoral bonds.
    • It described the move as a “retrograde step”.

Way Forward

  • Political parties should be brought under the ambit of the RTI act to enhance the accountability of money received in the form of donations.
  • There must be an annual audit by the CAG, or an auditor approved by it.
  • If bonds are to be retained as an instrument for contributing to political parties, donations must be made transparent, and parties should be obligated to file reports with the Election Commission and other oversight bodies disclosing the names of donors and amounts received.

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