July 13, 2024

Lukmaan IAS

A Blog for IAS Examination


THE CONTEXT: The Electoral Bond Scheme (EBS) aimed to create a transparent channel for political funding by eliminating black money. However, the scheme has been criticized for failing to ensure transparency and enabling unaccounted funds due to anonymity. The Supreme Court’s observations and controversies highlight the challenges in achieving its objectives.


  • Ambiguity and Lack of Transparency: Despite the intention to create a ‘clean’ channel for political funding, the EBS has been criticized for its lack of transparency. The scheme allows donors to remain anonymous, raising questions about the true source of political donations and whether it effectively prevents the flow of black money into politics.
  • Enforceability and Accountability Concerns: The scheme’s design makes it difficult to investigate the sources of funds used to purchase electoral bonds. A confidentiality clause prevents the disclosure of the buyer’s identity, except under specific conditions, which complicates the enforcement of laws against illegal funding and accountability of political donations.
  • Potential for Misuse: There are concerns that the scheme may not have stopped the use of black money in politics, as intended. The anonymity provided to donors could potentially facilitate a quid pro quo arrangement between donors and political parties, without any easy means to trace or investigate such dealings.
  • Legal and Regulatory Objections: The Supreme Court and the Reserve Bank of India (RBI) have raised concerns about the scheme. The RBI’s initial objections led to an amendment in its act, highlighting regulatory apprehensions about the scheme’s impact on financial transparency and governance.
  • Uneven Playing Field for Political Donors and Parties: The scheme may create disparities among political donors and parties. Donors who contribute to the ruling party might face allegations of quid pro quo, while those who do not could suffer adverse consequences. This situation could lead to an uneven competitive landscape in political funding and campaigning.
  • Public Debate and Legislative Responsibility: The resolution of these issues should not solely rely on judicial intervention but requires a consultative process involving Parliament. It calls for a more transparent and accountable system of political funding that avoids the pitfalls of the EBS and ensures a level playing field for all political entities.


  • Enhanced Transparency and Accountability: The political funding needs to be truly clean, there needs to be a system in place that ensures transparency and accountability. This could involve revising the EBS to make the sources of political donations more transparent, ensuring that the public and regulatory bodies can scrutinize the origins of political funds. Sweden and Canada have been successful in reducing the influence of private donations on political parties through generous public subsidies, which far exceed private donations. This success is attributed to strong disclosure laws, strict monitoring of electoral expenses, and tax incentives for smaller contributions.
  • Legislative and Regulatory Reforms: The issues with the EBS cannot be resolved solely through judicial intervention but require legislative action. Parliament is called upon to engage in a consultative process to find a more effective solution for political funding. This could involve crafting laws and policies in a transparent manner, with input from various stakeholders, to address the complexities of political funding. The UK’s experience with the significant rise in spending by groups other than the main campaigns in the 2016 referendum suggests that there may be a case for tighter restrictions on the volume of third-party activity to protect the primacy of political parties and candidates.
  • Public Debate and Engagement: A significant part of the solution involves fostering a public debate on the issue of political funding. There is an unprecedented need for political parties and the public to engage in discussions about the importance of clean money in politics. This could help build consensus on the need for reforms and the direction those reforms should take.
  • Seeking Alternatives to the EBS: The apex court is criticized for not suggesting alternative methods of political funding that could be less problematic than the EBS. It implies that finding a reasonable way forward requires exploring other models of political funding that prioritize transparency and reduce the risk of corruption. This could involve looking at successful models from other democracies or innovating new methods that suit the Indian context. Japan and Germany have managed to reduce the costs of elections and dependency on private business through a mix of supporting reforms, including bans on corporate donations, imposing spending ceilings, and improving transparency, along with public funding.
  • Commitment to Clean Funding by Political Parties: Ultimately political parties themselves need to be committed to accepting only clean money. This involves a cultural shift within parties to prioritize ethical funding practices and reject funds that do not meet transparency standards. Political parties are encouraged to lead by example and demonstrate their commitment to clean politics.
  • Voter Awareness and Demand for Probity: Vigilant voters ought to demand higher standards of probity from their political parties. Voters deserve better and should not settle for explanations that justify the status quo. By demanding transparency and accountability, voters can play a crucial role in pushing for reforms in political funding. International organizations like the Open Government Partnership and International IDEA advocate for increasing political finance transparency as part of the global anti-corruption agenda.


Parliament should involve all stakeholders in addressing the drawbacks of EBS and creating a more transparent and fair system for political funding. It requires collective efforts from lawmakers, political parties, and civil society to reform the current system and ensure that political funding does not compromise the democratic values of fairness and integrity.


Q.1 To enhance the quality of democracy in India the Election Commission of India has proposed electoral reforms in 2016. What are the suggested reforms and how far are they significant to make democracy successful? 2017

Q.2 What does ‘accountability’ mean in the context of public service? What measures can be adopted to ensure individual and collective accountability of public servants? 2014


Q.1 ‘’Transparency in political funding is required for good governance”. Explain.

SOURCE: https://www.thehindu.com/opinion/lead/indias-voters-deserve-a-bond-of-probity/article67973238.ece

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