Hindu Editorial Analysis : 31-October-2023

The introduction of electoral bonds in 2018 revolutionized the landscape of political funding in India, eliciting both praise and criticism. This unique instrument allowed individuals and companies to contribute to political parties through formal channels, aiming to curb the influence of cash donations and enhance transparency in the system.

Understanding Electoral Bonds
  • Nature and Purchase: Electoral bonds are bearer banking instruments available in various denominations, purchased through authorized branches of the State Bank of India.
  • Eligibility and Documentation: Indian citizens and entities incorporated in India can buy these bonds after submitting necessary documents, ensuring the legitimacy of the funds.
  • Anonymity and Transparency: To protect donor identity, bonds feature alphanumeric characters instead of names, promoting transparency in political funding.
Rationale for Electoral Bonds
  • Challenges in Previous System: Traditional political funding involved cash donations, leading to anonymity and unaccounted money inflow.
  • Introducing Transparency: Electoral bonds aimed to discourage cash donations, enhancing traceability and promoting financial transparency.
Success and Criticisms
  • Success Metrics: Electoral bonds quickly became a major funding source for political parties, formalizing contributions and reducing reliance on cash donations.
  • Critiques and Concerns:
    • Anonymity Challenges: Critics argued that donor anonymity hampers full transparency, undermining citizens’ right to know.
    • Legitimizing Corruption: Concerns were raised about unlimited anonymous funding, potentially legitimizing electoral corruption on a massive scale.
    • Legal and Regulatory Issues: The introduction of electoral bonds as a ‘Money bill’ bypassed legislative scrutiny, raising questions about its legality.
Challenges and Recommendations
  • Election Commission’s Concerns: The Election Commission highlighted the risk of transparency erosion and foreign corporate influence, emphasizing the need for stricter regulations.
  • RBI’s Objections: The Reserve Bank of India voiced concerns about electoral bonds fostering black money circulation, money laundering, and cross-border forgery.
Why In News

Electoral bonds have received tremendous attention and scrutiny as a unique poll funding instrument since their introduction in 2018, sparking intense debates about transparency and political financing practices.

MCQs about Electoral Bonds in India

  1. What is the main objective of introducing electoral bonds in India?
    A. To encourage cash donations for political parties
    B. To protect the anonymity of donors and increase transparency in political funding
    C. To limit political donations to a specific amount
    D. To eliminate political funding from corporations
    Correct Answer: B. To protect the anonymity of donors and increase transparency in political funding
    Explanation: Electoral bonds were introduced to protect the anonymity of donors and enhance transparency in political funding by formalizing the contribution process.
  2. Which organization expressed concerns about the potential impact of electoral bonds on Indian politics?
    A. State Bank of India
    B. Reserve Bank of India
    C. Election Commission of India
    D. Finance Commission of India
    Correct Answer: B. Reserve Bank of India
    Explanation: The Reserve Bank of India (RBI) raised concerns about electoral bonds increasing black money circulation, money laundering, and cross-border forgery.
  3. What is the validity period of electoral bonds from the date of issue?
    A. 30 days
    B. 15 days
    C. 60 days
    D. 90 days
    Correct Answer: B. 15 days
    Explanation: Electoral bonds are valid for fifteen calendar days from the date of issue. No payment can be made to any political party if the bond is deposited after the expiry of this validity period.
  4. How did electoral bonds impact the flow of political donations in India?
    A. Increased reliance on cash donations
    B. Decreased overall funding for political parties
    C. Formalized contributions and reduced reliance on cash donations
    D. Limited political donations to small denominations
    Correct Answer: C. Formalized contributions and reduced reliance on cash donations
    Explanation: Electoral bonds formalized political contributions, reducing reliance on cash donations and encouraging the use of formal banking channels. Over time, this led to more transparent and traceable funding for political parties.

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