Unveiling the Mystery of Electoral Bonds: Understanding Their Impact on Political Funding and Democracy


In the realm of democratic politics, funding plays a significant role in shaping the course of elections and governance. However, the issue of political funding has often been mired in controversy, with concerns about transparency, accountability, and the influence of money on the electoral process. In an attempt to address these concerns, electoral bonds were introduced as a financial instrument in India in 2018. In this blog, we will explore the concept of electoral bonds, their mechanism, and the broader implications they have on political funding and democracy. 

What are Electoral Bonds? 

Electoral bonds are financial instruments designed to facilitate political donations to registered political parties in India. These bonds function like promissory notes and can be purchased from designated branches of scheduled banks in India. The bonds are available in various denominations, and any individual or entity can buy them using legitimate channels of banking. 

The key feature that sets electoral bonds apart from traditional methods of political funding is anonymity. The identity of the donor remains confidential, and political parties are not obligated to disclose the names of the individuals or entities who purchase these bonds. 

The Mechanism of Electoral Bonds 

The process of electoral bonds can be summarized as follows: 

Purchase: Any eligible individual or entity can purchase electoral bonds from designated banks during specified periods. The bonds are available in different denominations, catering to various levels of political donations. 

Donation: The purchased electoral bonds can be donated to registered political parties of the donor’s choice. It is important to note that only political parties that have secured at least 1% of the votes in the most recent general election or state assembly election are eligible to receive these donations. 

Redemption: Political parties can redeem the electoral bonds at specified accounts within a prescribed period. These accounts are maintained by the political parties with authorized banks.

Anonymity: As mentioned earlier, one of the key features of electoral bonds is the anonymity of donors. Neither the public nor the Election Commission of India knows the identities of the donors, ensuring confidentiality. 

Advantages of Electoral Bonds 

Transparency: The use of electoral bonds aims to bring transparency to political funding by channeling contributions through the formal banking system. This reduces the possibility of unaccounted money flowing into the political system. 

Legal Route for Donations: Electoral bonds provide a legal and transparent route for individuals and corporates to contribute to political parties. It discourages cash donations, which were difficult to trace and often led to concerns about black money in politics. 

Privacy for Donors: Anonymity ensures that donors can support political parties without fear of repercussions or undue influence. This encourages political participation from a broader cross-section of society. 

Direct Connect with Citizens: Political parties receive funds directly through electoral bonds, allowing them to connect with citizens and garner support for their ideologies and policies. 

Criticism and Concerns 

Despite the intended benefits, electoral bonds have faced criticism and concerns: 

Lack of Transparency: Critics argue that the anonymity of donors compromises transparency, as it becomes challenging to trace the flow of funds and identify potential vested interests. 

Potential for Black Money: There are concerns that unaccounted money could still find its way into the political system through electoral bonds, as the actual source of funds remains hidden. 

Impact on Level Playing Field: Some argue that electoral bonds may favor larger political parties, as they are more likely to attract significant contributions from corporate donors. 

Conflict of Interest: The lack of disclosure of donor identities raises questions about potential conflicts of interest between the elected representatives and their financial supporters. 


Electoral bonds represent an attempt to address the challenges associated with political funding in India, aiming to bring greater transparency and accountability to the process. While the anonymity of donors may encourage more individuals and entities to participate in the political process, it also raises concerns about the potential misuse of the system. Striking a balance

between preserving the privacy of donors and ensuring the integrity of the democratic process remains a challenge. 

As electoral bonds continue to be a subject of public debate, it is essential for policymakers to evaluate their impact on political funding, governance, and the broader principles of democracy. Reforms, if any, should be aimed at striking the right balance between the need for transparency and the protection of individual rights, while preserving the essence of a democratic and participatory political system.