Challenging the Electoral Bond scheme

Challenging the Electoral Bond scheme


Political parties in India have long evaded public scrutiny regarding the sources and uses of their funds. The colossal amounts required for their processes rely heavily on contributions from Big Business, resulting in a quid pro quo arrangement. Civil society, advocating for an informed electorate and greater transparency in political funding, has utilized public interest litigation (PIL) to challenge these practices. This campaign is rooted in the citizen’s democratic right to information, integral to the fundamental right to speech and expression under the Constitution.


GS – 2 (Transparency & Accountability, Government Policies & Interventions, Elections)


Electoral Bonds, Political Parties, Representation of the People Act 1951

Mains Question:

Discuss the evolution of political funding in India, examining the impact of legislative changes and innovative schemes on transparency and the democratic process. (250 words)

Electoral Bonds:

  • Electoral Bonds, introduced in 2017 through a Finance bill and implemented in 2018, provide a way for individuals and entities to contribute to registered political parties while ensuring donor anonymity.
  • Issued by the State Bank of India (SBI) in various denominations, these bonds are interest-free and payable to the bearer on demand.
  • Only political parties meeting specific criteria are eligible to receive them, and the bonds can be purchased digitally or through cheques.
  • Transparency is enhanced as parties must disclose their bank accounts to the Election Commission of India (ECI), and donations are made through formal banking channels.
  • Benefits: Improved transparency, accountability in disclosing donation utilization, and the discouragement of cash transactions while preserving donor anonymity.
  • Challenges: Concerns about compromising the right to know, potential government access to donor data affecting fair elections, risks of unauthorized donations violating regulations, and the potential for crony capitalism and the infusion of black money. Loopholes regarding transparency for corporate entities and donation limits have also been highlighted, raising concerns about potential misuse and the need for regulatory safeguards.

Dimensions of the Article:

  • Legislative Maneuvers and the Corporate Donor Veil
  • Electoral Bonds: A Connection Between Politics and Big Business
  • Challenges to Constitutionality and Supreme Court’s Response

Legislative Maneuvers and the Corporate Donor Veil:

  • The introduction of the Electoral Trusts Scheme (2013) by the United Progressive Alliance and the subsequent Electoral Bond Scheme (EBS) by the National Democratic Alliance aimed to create a barrier between political parties and their corporate donors.
  • Legislative amendments, including those to the Foreign Contribution (Regulation) Act (FCRA) and the Representation of the People Act (RPA), were instrumental in facilitating the implementation of the EBS.
  • These changes faced opposition in a public interest litigation (PIL) filed by the Association for Democratic Reforms (ADR) and Common Cause. The petition argued that these alterations jeopardized citizen autonomy, undermined transparency, and potentially incentivized corrupt practices by removing caps on corporate donations.

Electoral Bonds: A Connection Between Politics and Big Business

  • Electoral bonds have emerged as the preferred method of political donation, constituting a significant percentage of total contributions.
  • An analysis by the Association for Democratic Reforms (ADR) revealed a notable concentration of electoral bonds in favor of the Bharatiya Janata Party (BJP).
  • Despite the substantial sums involved, questions persist regarding the actual impact of these bonds on funding needs, particularly in the context of general elections.
  • The concentration of financial support through electoral bonds raises concerns about the influence of big business on the democratic process.

Challenges to Constitutionality and Supreme Court’s Response:

  • A public interest litigation challenging the constitutionality of electoral bonds has experienced delays but is now approaching resolution. The Supreme Court’s rejection of an interim stay on the scheme and its emphasis on potential voter scrutiny through corporate filings raise questions about the practicality of transparency.
  • The government’s argument for protecting donor anonymity, ostensibly to shield them from political retribution, is debated, especially considering a significant majority of electoral bond sales involve large denominations beyond the capacity of individual donors. The outcome of this legal battle will likely shape the landscape of political funding, determining whether transparency and fairness can be restored in the democratic process.


  • The hope for a more transparent and equitable political funding system in India lies in the expeditious handling of the PIL by the Constitution Bench. The resolution of this case will likely influence future elections and whether a level playing field can be achieved.
  • Balancing donor privacy and the public’s right to know remains a critical challenge, and the judiciary’s commitment to upholding democratic principles will play a pivotal role in shaping the outcome.