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Electoral Bonds Scheme challenged in SC – Burning Issues – Free PDF Download


  • On Friday, the Supreme Court dismissed petitions seeking to stay the sale of fresh electoral bonds ahead of Assembly elections in West Bengal, Tamil Nadu, Kerala, Assam and Puducherry.
  • Although the court said there is no justification to stay the current sale, the larger constitutional challenge to the electoral bonds scheme filed in 2017 is still pending.

What is the pending challenge?

  • It was filed by the Association for Democratic Reforms, which works for electoral transparency and accountability, along with Common Cause, another non-profit.
  • The court had admitted the plea and sought responses from the government and the Election Commission of India (EC

What are electoral bonds?

  • Announced in the 2017 Union Budget, electoral bonds are interest-free bearer instruments used to donate money anonymously to political parties.
  • A bearer instrument does not carry any information about the buyer or payee, and the holder of the instrument (which is the political party) is presumed to be its owner.

What are electoral bonds?

  • The bonds are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, and State Bank of India is the only bank authorised to sell them. Donors can buy and subsequently donate bonds to a political party, which can encash the bonds through its verified account within 15 days.
  • There is no limit on the number of bonds an individual or company can purchase. If a party hasn’t enchased any bonds within 15 days, SBI deposits these into the Prime Minister’s Relief Fund. A total of 12,924 electoral bonds worth Rs 6534.78 crore have been sold in 15 phases between March 2018 and January 2021.

Why have they been challenged?

  • The point of contention is the anonymity provided to donors of electoral bonds. Through an amendment to the Finance Act 2017, the Centre has exempted parties from disclosing donations received through electoral bonds. In other words, they need not disclose these details in their mandatory contribution reports to the Election Commission every year.
  • This means voters will not know which individual, company, or organisation has funded which party, and to what extent.

How popular are these bonds?

  • By virtue of the anonymity they offer to donors, electoral bonds have become the most popular route of donation. More than half the total income of national parties and the regional parties analysed by ADR for the financial year 2018-19 came from electoral bonds donations.
  • The BJP is the biggest beneficiary, having received Rs 1,660.89 crore, or 60.17% of the total Rs 2,760.20 crore received by parties via electoral bonds in 2017-18 and 2018-19.

What is the EC’s stand?

  • In its submission to the Standing Committee on Personnel, Public Grievances, Law and Justice in May 2017, the EC had objected to amendments in the Representation of the People Act that exempt political parties from disclosing donations through this route.
  • In a letter to the Law Ministry the same month, the EC had asked the government to “reconsider” and “modify” the above amendment.




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