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Electoral Bonds: All You Need To Know

Published on Monday, February 06, 2017


The 2017-18 Budget caught much attention for numerous revolutionary moves, in continuance of the battle against black money initiated by the Modi- Jaitley duo with the latter announcing some bold steps aimed at checking the flow of black money into election campaign funds, with the objective of bringing about transparency and accountability in election funding as well as political donations. The move is interpreted as an attempt to realize the Budget theme “Transform, Energize and Clean India”.

Important Measures Adopted

  • A cap on the amount of money that any political party could receive as funds from individuals as liquid cash payments, fixed at INR 2000, reduced form the earlier level of INR 20,000.
  • Proposed roll out Electoral bonds. Finance Minister in his Budget speech has announced the roll out of an Electoral Bond scheme. For the same an amendment to the Reserve Bank of India Act is in the anvil. The government has taken such a stance to check the flow of Black money into the election campaigns, based on the recommendations of the Election Commission of India.

Electoral Bonds: Lay out and Strategy

  • For the issuance of electoral bonds, the political parties have to furnish the details of a bank account with the Election Commission which will be used solely for the purpose of fund raising via electoral bonds and it will be regulated by the Election Commission itself or any other regulatory body to safeguard transparency of transactions, as well as secrecy of donors involved.
  • A notified bank as per the discretion of the concerned regulators will be issuing the electoral bonds akin to financial bonds for the political parties. Interested donors can buy these bonds by means of cheque or digital payment mode, to ensure transparency. These bonds will be given to the political parties, who can redeem the same through the notified bank account within a stipulated short period of time.
  • The donor and recipient in this transaction are eligible for tax exemptions, with donor getting a deduction and recipient political parties getting tax exemptions, provided returns are filed properly by the recipient political parties on a timely basis. The official roll out of electoral bond scheme is scheduled for 1 April, 2018.


The attempt to streamline the election campaigns with regard to the legitimacy of funding involved is quite a bold move made with the purpose to regulate the flow of unaccounted money into the democratic election process. However the proposed measures were quiet about any upper limit with regard to donations by the corporate demagogues. Similarly no mention has been made with regard to any upper limits on cashless, digital donations. Though the move categorically states about bringing in transparency, to the election funding process, the reference itself to maintain the secrecy of donors involved in cashless election funding, is nothing short of the violation of the basic tenets and purpose of the scheme. Whether the proposed scheme would eventually catalyze the cleansing of election campaigns and the funding processes involved holds onto the efficiency of proposed roll out and its outcome.

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