Electoral Bonds are financial instruments introduced by the government of India in 2018 as the mechanism for the transparent political funding. They were aimed at addressing the issue of cash donations to political parties. Which often led to questions about transparency and accountability in the political process.

The Electoral Bonds Scheme is the financial instruments introduced by the Government of India in 2018 to enable to transparent political funding. What is electoral bond scheme? These bonds are essential bearer instruments that function like promissory notes, allowing individuals and organizations to donate money to political parties without revealing their identities.

Here’s how the scheme works:

1.  Issuance – electoral bond scheme are issued by notified banks for specified denominations, ranging from as low as Rs. 1000 to as high as Rs. 1 crore or more.

2.  Purchase – Any Indian Citizen or body incorporated in India can purchase these bonds from specified branches of authorized banks. The purchaser does not need to disclose their identity to the political party receiving the bond.

3.  Donation – The Purchaser can then donate these bonds to any eligible political party. The political party can encash these bonds within a specified period.

4. Encashment - Political parties can encash these bonds only through designated bank accounts within the specified period. The bond is valid for 15 days from the date of issuance. If not encashed within this period, they become void.

The scheme was introduced with the objective of bringing transparency in the political funding by eliminating the use of the cash and ensuring that donations made to the political parties are accounted for and auditable.

The scheme has been subject to the criticism from various quarters. Critics argue that it fails to address the issue of the transparency adequately since the identity of the donor remains anonymous. Moreover, concerns raised regarding the potential for misuse of the scheme by allowing undisclosed corporate donations to political parties.

The Electoral Bonds Scheme continues to be in operation, with the government defending it as a step towards cleaner and more transparent political funding.

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