Electoral Reforms In India

Electoral bonds: Govt, RBI finalising norms; unveiling likely by year-end


Mains Paper2 | Functions and responsibilities of the Union and the States

The following things are important from UPSC perspective:

Prelims: Electoral Bonds

Mains level: This news card talks discusses Electoral Bonds and some concerns regarding them.


The government is expected to unveil the electoral bonds scheme by the end of next month as the finance ministry and the Reserve Bank of India are close to finalising the norms for these bonds.


  1. Finance minister during his Budget speech, had proposed steps for cleansing political funding, including a ban on cash donations of over Rs 2,000 to a political party from any individual.
  2. He had also announced the proposal to issue electoral bonds through which a donor could buy bonds from authorised banks against cheques and digital payments that would be redeemable only in the designated account of a registered political party.

Electoral Bonds

  1. These bonds are likely to be issued by the RBI and some public sector banks and will have a limited validity during which these can be deposited into designated accounts of the political parties.
  2. The government has taken into consideration the issues of transparency raised by the Election Commission and other stakeholders.
  3. These bonds will not be allowed to be traded.
  4. The smallest bond may be of Rs 1,000 denomination and donors can buy them in multiples.

Other changes related to Electoral Bonds

  1. The government had also introduced omission of the first proviso in Section 182 of the Companies Act, 2013, which consequently removed limits on corporate donations to political parties.
  2. Under Section 29C of the Representation of the People (RP) Act, political parties have to file contribution reports complete with details of donors for any contribution above Rs 20,000.
  3. This was amended in the Budget session this year to introduce a proviso and explanation that exempts political parties from disclosing donations received from electoral bonds, even if it is above the prescribed limit.
  4. According to Finance Bill amendments, the previous limit of 7.5 per cent of the average three-year net profit for donations has been removed and companies are no longer required to name the parties to which contributions are made they will be required to disclose the amount.

Concern raised by EC regarding Electoral Bonds

  1. Former Chief Election Commissioner had expressed concerns saying that electoral bonds would impact transparency negatively and the poll panel had not been consulted.
  2. But the government has reiterated the need to cleanse the entire system of political funding.



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