maurya 
Electoral Bonds
Comprehensive Outline for “Electoral Bond”
| Main Topics | Subtopics |
|---|---|
| 1. Introduction to Electoral Bonds | – What are Electoral Bonds? – Overview of the Electoral Bond Scheme in India |
| 2. History and Evolution of Electoral Bonds | – Origin and Need for Electoral Bonds – Key Milestones in the Development of Electoral Bonds |
| 3. How Electoral Bonds Work | – The Process of Purchasing Electoral Bonds – How Electoral Bonds are Redeemed – Validity and Expiry of Electoral Bonds |
| 4. Purpose of Electoral Bonds | – Enhancing Transparency in Political Funding – Reducing the Role of Cash in Elections |
| 5. Types of Electoral Bonds | – Denominations Available – Eligibility Criteria for Purchase |
| 6. Regulatory Framework for Electoral Bonds | – Laws Governing Electoral Bonds in India – Role of the Reserve Bank of India (RBI) and State Bank of India (SBI) |
| 7. Advantages of Electoral Bonds | – Increased Transparency in Political Funding – Anonymity of Donors – Encouraging Clean Money in Politics |
| 8. Criticisms and Controversies Surrounding Electoral Bonds | – Lack of Full Transparency – Potential for Misuse by Political Parties – Impact on Smaller Political Parties |
| 9. Comparison with Other Political Funding Mechanisms | – Electoral Bonds vs. Cash Donations – Electoral Bonds vs. Public Funding – Electoral Bonds vs. Online Donations |
| 10. Impact of Electoral Bonds on Indian Politics | – Influence on Election Outcomes – Effect on Political Accountability and Corruption |
| 11. Case Studies: Electoral Bonds in Recent Indian Elections | – Use of Electoral Bonds in the 2019 General Elections – Impact on State Elections |
| 12. Global Perspectives on Political Funding | – Political Funding Models in Other Democracies – Lessons for India from International Practices |
| 13. Future of Electoral Bonds in India | – Proposed Reforms and Amendments – Public Opinion and Political Will |
| 14. Legal Challenges and Court Cases | – Notable Court Cases Against Electoral Bonds – Supreme Court’s Stance and Rulings |
| 15. FAQs About Electoral Bonds | – How can an individual purchase electoral bonds? – Are electoral bonds taxable? – What is the maximum amount that can be donated via electoral bonds? – Who benefits the most from electoral bonds? – Can foreign entities buy electoral bonds? – How does the government ensure transparency in the use of electoral bonds? |
**1. Introduction to Electoral Bonds**
Electoral Bonds are a financial instrument designed to facilitate the funding of political parties in India. Introduced by the Government of India in 2018, the Electoral Bond Scheme aims to increase transparency in political financing and reduce the influence of unaccounted cash. The scheme allows individuals and corporate entities to purchase bonds from designated branches of the State Bank of India (SBI) and donate them to political parties, which can then encash them through their registered bank accounts. This system aims to eliminate the traditional practice of cash donations to political parties, which has been a source of corruption and black money.
**2. History and Evolution of Electoral Bonds**
The concept of Electoral Bonds was introduced by the Government of India in 2017 as part of the Union Budget speech. The need for such a mechanism arose from the widespread use of cash in political donations, which often led to corruption and lack of transparency. The Electoral Bond Scheme was officially launched in January 2018, with the first sale taking place in March of the same year. Over the years, several amendments and clarifications have been made to improve the scheme, addressing concerns raised by political parties, civil society, and legal experts.
**3. How Electoral Bonds Work**
Electoral Bonds are sold in denominations ranging from ₹1,000 to ₹ one crore. Individuals and corporate entities can purchase these bonds from designated branches of SBI during specific windows announced by the Government of India. The buyer is required to fulfill the KYC (Know Your Customer) norms, ensuring that the identity of the purchaser is known to the bank but not to the public. The purchased bonds can then be donated to any political party registered under Section 29A of the Representation of the People Act, 1951, and which has secured at least 1% of the votes in the last general election. The political party can then encash these bonds through its verified bank account.
The bonds are valid for 15 days from the date of issuance, and if not encashed within this period, they are deemed to have expired. This ensures a quick and transparent transfer of funds to the political party. The bond system ensures that while the donor’s identity remains confidential to the public, the government and the banking authorities are aware of the transaction details.
**4. Purpose of Electoral Bonds**
The primary objective of Electoral Bonds is to bring about greater transparency in political funding. By allowing donors to contribute funds without disclosing their identity publicly, the scheme aims to curb the use of black money in elections. Moreover, by channeling donations through the banking system, Electoral Bonds reduce the role of cash in elections, which has historically been a significant source of corruption. The government also believes that this system will encourage more corporate donations, which are more likely to be accounted for and thus cleaner than cash donations.
**5. Types of Electoral Bonds**
Electoral Bonds are available in several denominations, including ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore. These denominations make it possible for a wide range of donors, from individuals to large corporations, to participate in political funding. The bonds are issued only to those who meet the eligibility criteria, which include being an Indian citizen, a body incorporated in India, or a trust established in India. Foreign entities and non-residents are not allowed to purchase these bonds, ensuring that only Indian entities can influence Indian elections.
**6. Regulatory Framework for Electoral Bonds**
The Electoral Bond Scheme is governed by the Electoral Bond Rules, 2018, which the Ministry of Finance notified. The scheme operates under the supervision of the Reserve Bank of India (RBI) and the State Bank of India (SBI). The RBI is responsible for issuing guidelines regarding the sale and encashment of the bonds, while the SBI is the sole bank authorized to sell and encash the bonds. Additionally, the scheme is subject to various laws, including the Income Tax Act of 1961, which provides for tax exemptions on donations made through Electoral Bonds.
**7. Advantages of Electoral Bonds**
Electoral Bonds offer several advantages, including increased transparency in political funding and the reduction of black money in elections. By requiring all transactions to be made through the banking system, the scheme ensures that donations are accounted for and traceable, reducing the potential for corruption. Additionally, the anonymity provided to donors encourages more individuals and corporations to contribute, as they can do so without fear of political retribution or public scrutiny. This, in turn, promotes cleaner and more ethical political funding.
**8. Criticisms and Controversies Surrounding Electoral Bonds**
Despite the benefits, Electoral Bonds have been subject to significant criticism and controversy. One of the main concerns is the need for full transparency, as the public needs access to information about who is funding which political party. Critics argue that this could lead to a situation where political parties are unduly influenced by large, anonymous donors, undermining the democratic process. Additionally, there is concern that the scheme favors larger political parties that are more likely to attract substantial corporate donations, thereby marginalizing smaller parties.
**9. Comparison with Other Political Funding Mechanisms**
Electoral Bonds are just one of several mechanisms available for political funding in India. Unlike cash donations, which are untraceable and often unaccounted for, Electoral Bonds provide a more transparent and accountable means of funding. However, unlike public financing, where the state provides funds to political parties based on their performance in elections, Electoral Bonds do not reduce the reliance on private donations, which can lead to potential conflicts of interest. Compared to online donations, which are also traceable and can be made publicly transparent, Electoral Bonds offer more anonymity to the donor.
**10. Impact of Electoral Bonds on Indian Politics**
The introduction of Electoral Bonds has had a significant impact on Indian politics, particularly in terms of funding and election outcomes. Political parties with strong corporate backing have been able to secure substantial funds through Electoral Bonds, which has increased their spending power in elections. This has raised concerns about the influence of money in politics and the potential for larger parties to dominate the electoral landscape. However, it has also led to greater accountability among political parties, as they are required to disclose the amounts received through Electoral Bonds in their annual reports to the Election Commission of India.
**11. Case Studies: Electoral Bonds in Recent Indian Elections**
The use of Electoral Bonds in the 2019 General Elections in India provides a clear example of their impact on political funding. During this election cycle, political parties received over ₹6,000 crore through Electoral Bonds, with a significant portion going to the ruling party—this influx of funds allowed parties to increase their campaign spending, particularly on advertising and outreach efforts. Similarly, in state elections, Electoral Bonds have become a major source of funding, highlighting their growing importance in the Indian political landscape.
**12. Global Perspectives on Political Funding**
Political funding models vary widely across democracies, with some countries opting for strict regulations
FAQs About Electoral Bonds
1. How can an individual purchase electoral bonds?
An individual can purchase electoral bonds by visiting a designated branch of the State Bank of India (SBI) during the specified sale windows announced by the government. The individual must fulfill the KYC (Know Your Customer) norms, providing valid identification and payment from a registered bank account. Once the purchase is made, the individual can donate the bond to any eligible political party.
2. Are electoral bonds taxable?
No, electoral bonds themselves are not taxable. However, the donor may be subject to income tax regulations depending on their overall income and tax status. Donations made through electoral bonds are also eligible for deductions under Section 80GGB (for individuals) and Section 80GGC (for companies) of the Income Tax Act, 1961.
3. What is the maximum amount that can be donated via electoral bonds?
There is no upper limit on the amount that can be donated via electoral bonds. However, the bonds are available in specific denominations of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore, allowing donors to choose the amount they wish to contribute based on these denominations.
4. Who benefits the most from electoral bonds?
Electoral bonds primarily benefit political parties, especially those with significant corporate support. They provide a legal and transparent means for parties to receive donations, which helps in funding their election campaigns. Additionally, donors, particularly corporations, benefit by being able to contribute anonymously without public scrutiny or backlash.
5. Can foreign entities buy electoral bonds?
No, foreign entities and non-residents are not permitted to purchase electoral bonds. Only Indian citizens, bodies incorporated or established in India, and trusts with Indian origins are eligible to purchase these bonds. This restriction ensures that foreign entities do not influence Indian elections through donations.
6. How does the government ensure transparency in the use of electoral bonds?
The government ensures transparency through the regulation of the sale and encashment process, monitored by the Reserve Bank of India (RBI) and conducted by the State Bank of India (SBI). Although the donor’s identity remains confidential to the public, the government and banking authorities have access to this information. Political parties receiving donations through electoral bonds must also report the total amount received to the Election Commission of India.
