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Electoral Bond Scheme UPSC NOTE

 What is electoral bond scheme


  • The electoral bonds system was introduced in 2017 by way of a Finance bill and it was implemented in 2018.

  • They serve as a means for individuals and entities to make donations to registered political parties while maintaining donor anonymity.

  • State Bank of India (SBI) issues the bonds in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.

  • Purchased by Indian citizens or entities established in India.

  • Can be bought individually or jointly with other individuals.

What is electoral bond scheme


  • Valid for 15 calendar days from the date of issue.

  • Authorized issuer through designated SBI branches.

Eligibility of Political Parties:

  1. Only the political parties registered under Section 29A of the Representation of the People Act, 1951.

  2. Secured not less than 1% of the votes polled in the last general election to the House of the People or the Legislative Assembly, are eligible to receive electoral bonds.

Purchase and Encashment:

  • Electoral Bonds can be purchased digitally or through cheques.

  • Encashment only through an authorized bank account of the political party.

Transparency and Accountability:

  • Parties must disclose their bank account with the Election Commission of India (ECI).

  • Donations are made through banking channels, ensuring transparency.

  • Political parties are obligated to explain the utilization of the funds received.

What are the challenges associated

  • Electoral bonds are donations to political parties that hide the identity of the donors and recipients

  • They may compromise the right to know, which is part of the right to freedom of expression under Article 19 of the Constitution.

  • Anonymity may be compromised by government access to donor data. 

  • This implies that the government in power can leverage this information and disrupt free and fair elections.

  • Potential for unauthorized donations violating regulations.

  • Risk of crony capitalism and infusion of black money.

    • Crony Capitalism is an economic system characterized by close, mutually advantageous relationships between business leaders and government officials.

  • Loopholes regarding transparency for corporate entities and donation limits.

    • As per Companies Act 2013, a company can make a political contribution only if its net average profit of three preceding financial years is at 7.5%. 

    • The removal of this clause has raised concerns of black money in political funding through shell companies.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Electoral Bond Scheme UPSC NOTE
Electoral Bond Scheme UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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