• An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of SBI.
• Electoral bond scheme was announced in Union Budget 2017-18 in an attempt to:
• To curb black money and use of cash in political funding;
• To eliminate fraudulent political parties that were formed on pretext of tax evasion.
• Protects donor from political victimization due to nondisclosure of identity of the donor.
Issues with Electoral bonds:
• Allowed possibility of corporate misuse as it removes limits and disclosure requirements on Company donations to Political Parties.
• Lack of level playing field in terms of political funding as it restricts the benefits of electoral bonds only to a few political parties.
• Notably, in SC, Centre and EC had taken contrary stands on Electoral bonds.
• Centre: Allowing anonymity in political funding will “promote transparency in funding and donation received by political parties”.
• EC: This would “compromise transparency” and could lead to “increased use of black money for political funding through shell companies”.
Mains Paper 3: Economy
Prelims level: Electoral Bonds
Mains level: About Electoral Bonds and related issues