In India, the financing of political parties has long been a contentious issue, marked by opacity and allegations of corruption. Traditional methods of funding, often involving cash donations, lack transparency and accountability which raises concerns about the influence of vested interests on the democratic process.
In response to these challenges, the concept of electoral bonds was introduced as a potential solution to bring greater transparency and accountability to political funding.However this reform initiative has sparked debate and controversy in recent times. Let us delve deeper into this by unfolding the intricate mechanism behind electoral bonds.

Decoding Electoral Bonds
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 State Bank of India. The citizen or corporate can then donate the same to any eligible political party of his/her choice. The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest. An individual or party will be allowed to purchase these bonds digitally or through cheque.
The electoral bonds are available for purchase for 10 days at the beginning of every quarter. The first 10 days of January, April, July and October have been specified by the government for purchase of electoral bonds. An additional period of 30 days shall be specified by the government in the year of Lok Sabha elections. Using electoral bonds is quite simple. The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000 and Rs 1 crore (the range of a bond is between Rs 1,000 to Rs 1 crore). These will be available at some branches of SBI. A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice. Now, the receiver can encash the bonds through the party's verified account.
This convenient loophole offers political parties to boost their financial reserves with minimal accountability. 

Sparking Debate: Unravelling the Controversies
The electoral bond scheme undermines shareholder rights by allowing companies to funnel money to political parties without shareholder oversight. The removal of transparency clauses from the Companies Act 2013 exacerbates this issue, potentially enabling black money flow through shell companies. Loopholes in donation limits and asymmetrical access to donor details raise concerns about political transparency and accountability. Critics argue that this scheme violates citizens' Right to Information under the Constitution, fostering a climate of opacity and potential crony capitalism.
 
For Instance, Future Gaming and Hotel Services, although not widely recognized in the public eye emerged as the top purchaser of electoral bonds with an investment of ₹1,368 crore, surpassing contributions from many notable corporate entities. The ruling Bharatiya Janata Party (BJP) reaped the most significant benefits, securing ₹6,566 crore (54.77% of the total donations) in donations through the electoral bonds, significantly outpacing its closest competitor -  the Congress party, which received ₹1,123 crore (9.37%). 
Reliance Industries led by Mukesh Ambani and the Adani Group led by Gautam Adani did not feature among the donors despite being two of India’s largest conglomerates. Following the release of the electoral bond data, the Congress party raised concerns about discrepancies. The donor file contained 18,871 entries, while the recipient file had 20,421 entries.
 
In response to these revelations, the verdict by the Supreme Court on 15 February 2024, delved into two fundamental questions: “whether unlimited corporate funding to political parties violates the principles of free and fair elections”, and “whether political parties' right to keep voluntary contributions undisclosed supersedes voters' right to information.” In a resounding decision, the Court held that Electoral Bonds infringe upon voters' right to information and deemed unlimited corporate contributions to be arbitrary and in violation of the right to equality before the law. As a direct consequence, the State Bank of India has been directed to cease the issuance of electoral bonds.

The Value of Confidentiality 
Imagine being able to donate openly to any political candidate or party without fearing any harassment, threats, ostracization or denials of business licences and permissions. This situation is unfortunately not common in India. For example, consider a hypothetical wealthy landowner in a village in an Indian state known for political violence. This person may support one party financially and be publicly compelled to signal support to another. In this situation, confidentiality may make the difference between his life and death.
 Confidentiality allows citizens to vote with their money discreetly. This is an important part of the free exercise of political preferences. Free elections depend on both secret ballots and the ability to support candidates and parties confidentially. These considerations become more important when ruling parties have asymmetric advantages over their competitors. Confidentiality can therefore promote greater competition in risky political environments.
 
The Supreme Court views the current demand for transparency in the use of electoral bonds as an issue of distrust in politics and corporate greed. While these undoubtedly exist in the Indian political system, it is worth looking at the more disparate effects of electoral bonds.
   
Fairness in Funding - A Call to action
A clean & transparent electoral funding process is vital to ensure a fair electoral democracy. Most developed countries in the West have robust mechanisms to ensure transparency in their political systems. As India aspires to emulate the West by setting the ambition of achieving developed country status by 2047, it must aspire for similar standards of transparency in the political sphere. Cleaning up electoral finance can be the first step in this regard.
The electoral bonds scheme only highlights the growing weakness of Indian democracy. It could have worked in an ideal situation but then it would not have been required. It seems to have been designed to weaken the Opposition and democracy.