Daily Answer Writing
30 March 2021

Q) Since the Indian Independence many noteworthy steps have been taken to prevent the illicit role of muscle of money power in Indian elections. In this context, critically analyse the efficacy of electoral bonds scheme. (150 Words)


GS2: RPA(election Issues)

Approach Answer: 


Introduction: Over the years various provisions have been introduced in the Representatives of People Act, 1951 to prevent the use of muscle and money power in politics. For example, expenditure limit for each candidate on an election, restriction on misuse government office, candidates with criminal background cannot run for elections. However, due to loopholes in the political donations, blackmoney finds way into the politics. For this reason electoral bonds were introduced.


Electoral Bonds are a Bearer's instrument which can be purchased by any Indian citizen or any body incorporated in India from authorised banks against cheque and digital payments(from KYC compliant Bank accounts).


Features of the Elecoral Bonds:

               1. They are anonymous bonds.

               2. Denominated in the multiples of ?1000, ?10,000, ?1L, ?10L, ?1Cr.

               3. Valid for 15 days and issued on specified dates by authorized banks.

               4. They shall be redeemable only in the designated account of a registered political party.

               5. Every party that is registered under Sec 29A of RPA and has secured at least 1%of the votes polled in the most recent LS election or state election is allotted a verified account by Election commission of India.

               6. These bonds are not tradable.


Advantages of such a scheme:

               1. Routing out of Black money: Only accounted money can be used to buy bonds.

               2. Anonymity Protects donor from political victimization.

               3. Ease of Doing business: Corporate houses can be protected from unwarranted politicking.

               4. Favour digitalization: It would reduce cash donations.

               5. Reduction of criminalization: due to less cash, illegal activities would be difficult to perform.


 Problems of the scheme:

               1. Opacity eased up: These bonds would not have name of the buyer. Any contributions received by way of electoral bond shall be excluded from reporting.

               2. Unlimited corporate funding: 7.5% Cap on corporate contribution has been removed via amendments in RPA & Companies act.

               3. No defence against money laundering by dummy companies as there is no limit on companies from donating any amount over its net profit, as contribution through Shell Companies & Foreign Contribution is possible.

               4. Wouldn't reduce cash: It might not work at all as parties may get donations via cash(below ?2000 according to RPA).

               5. Tractability: These bonds might be traceable by the party in power.

               6. Favours Ruling Party: An RTI revealed 94.6% of all electoral bonds sold in 2017-18 went to Ruling party.

               7. Violates RTI: The does not know the funding sources of the political party and thus are unaware of the intentions of the party.


Conclusion: The Electoral bond scheme would reduce the criminal money routing into the politics. However, it has further eased up anonymity. This issue was raised in the front of the Supreme court which was rejected with argument that there are certain safeguard which stops entering of the black money into the politics, thus shielding politics from illicit use of muscle and money power.

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