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15th February 2024 (8 Topics)

Supreme Court bans Electoral Bond

Context

India’s Supreme Court banned electoral bonds, mysterious source of funding for elections.

Key Highlights

  • The court announced its verdict on an ongoing petition calling for the bonds to be scrapped.
  • The scheme has been under scrutiny, and the top court had in November said that the bonds “put a premium on opacity” and can be “misused for money laundering”.

What are electoral bonds?

  • Electoral bonds (EBs) are “bearer” instruments, like currency notes.
  • They are sold in denominations of 1,000 rupees ($12), 10,000 rupees ($120), 100,000 rupees ($1,200), one million rupees ($12,000) and 10 million rupees ($120,000).
  • They can be purchased by individuals, groups or corporate organisations and donated to the political party of their choice, which can then redeem them, free of interest, after 15 days.

Issues in the system

  • Secret identity: While political parties are required to reveal the identities of all donors who donate more than 20,000 rupees ($240) in cash, the names of those donating via electoral bonds never have to be revealed, no matter how large the sum.
    • Since their introduction, EBs have become the primary method of political funding – 56 percent of all funding in Indian politics comes from EBs.
  • Undemocratic: The ability to donate money anonymously has made them extremely popular but is also shrouded in secrecy, which many argue is undemocratic and could provide cover for corruption.
  • Legalised corruption:By permitting uncapped, anonymous donations from any source, electoral bonds open the doors to “legalised corruption”.
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