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Understanding Electoral Bonds: A Detailed Analysis for UPSC Aspirants

Understanding Electoral Bonds: A Detailed Analysis for UPSC Aspirants Banner - The Best IAS Coaching in Delhi | SHRI RAM IAS Study Centre

Electoral Bonds emerged as a significant mode of political funding in India starting from 2017 until their recent invalidation by the Supreme Court on 15th February 2024. This development has sparked discussions about transparency, accountability, and the impact of electoral funding mechanisms on democratic processes. For UPSC aspirants, gaining a comprehensive understanding of electoral bonds is essential as it pertains to governance, finance, and the legal framework surrounding elections.

Genesis of Electoral Bonds

The concept of Electoral Bonds was introduced through the Finance Bill of 2017 during the Union Budget by then Finance Minister Arun Jaitley. These bonds were designed as a means for political parties to receive funding from individuals or organizations while maintaining anonymity for the donors. The scheme was classified as a Money Bill, bypassing certain parliamentary scrutiny processes, which raised concerns regarding its alignment with constitutional provisions.

Key Features of Electoral Bonds

1. Anonymity: Electoral Bonds allowed donors to contribute to political parties without revealing their identities, ensuring confidentiality in political funding.

2. Issuance and Redemption: These bonds could be purchased from specific branches of the State Bank of India (SBI) through cheque or digital payments and redeemed within 15 days in the designated account of a registered political party.

3. Denominations and Sale Periods: Electoral Bonds were available in various denominations ranging from one thousand to one crore rupees and were sold during specific periods, including additional days during election years.

4. Regulatory Framework: The scheme required compliance with KYC norms and fell under the regulatory purview of the Reserve Bank of India (RBI) and the Election Commission of India (ECI).

Controversies and Amendments

Despite the intended purpose of enhancing transparency, Electoral Bonds faced criticism and controversies:

• Concerns were raised about the potential for quid pro quo arrangements between corporations and politicians due to the anonymity of donors.

• Amendments were made to increase the sale days of Electoral Bonds, leading to questions about the timing of these changes in relation to electoral processes.

• Opposition parties, including the Congress and the Communist Party of India (Marxist), expressed reservations about the scheme and its impact on political funding dynamics.

Legal Challenges and Supreme Court's Verdict

The legality of Electoral Bonds came under scrutiny, leading to a legal battle that culminated in the Supreme Court's decision to strike down the scheme as unconstitutional. The court highlighted violations of the Right to Information (RTI) and voters' right to information about political funding under Article 19(1)(a) of the Constitution. This landmark ruling has significant implications for electoral funding norms and transparency in political processes.

Impact on Political Funding Landscape

The introduction and subsequent invalidation of Electoral Bonds have reshaped discussions around political funding in India:

• The reliance on unknown sources of funding has been a longstanding issue, with electoral bonds contributing significantly to this category.

• Political parties have been urged to disclose comprehensive details of their funding sources to ensure transparency and accountability.

• The role of financial institutions, regulatory bodies, and legislative measures in overseeing political funding practices has come under scrutiny.

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For UPSC aspirants preparing for the Civil Services Examination, including the optional subject of Political Science and International Relations (PSIR), understanding electoral funding mechanisms and related legal and governance frameworks is crucial. SHRI RAM IAS in Delhi and Mukherjee Nagar is the one of the best IAS coaching in Delhi and best IAS coaching in Mukherjee Nagar offer expert guidance, comprehensive study materials, and mentorship to help aspirants navigate complex topics such as electoral reforms, constitutional provisions, and judicial interventions.


The journey of Electoral Bonds from inception to invalidation reflects the evolving landscape of political funding in India. Aspiring civil servants must stay updated on such developments, analyze their implications on governance and democracy, and engage in critical discussions to contribute meaningfully to policy discourse. The Supreme Court's verdict on Electoral Bonds underscores the importance of upholding constitutional principles, transparency, and accountability in electoral processes, shaping the future trajectory of political funding regulations in the country.