Electoral Bonds vs. Electoral Trusts


In the vibrant tapestry of democratic nations, the funding of political parties plays a pivotal role in shaping the course of governance. In India, two prominent mechanisms have emerged as instruments for channeling financial contributions to political entities – Electoral Bonds and Electoral Trusts. Both aim to bring transparency to political funding, yet their structures and implications differ significantly. In this exploration, we delve into the nuances of Electoral Bonds and Electoral Trusts, unraveling their features, merits, and controversies.


Electoral Bonds: A Closer Look

Electoral Bonds, introduced in 2018 by the Government of India, were envisioned as a means to cleanse the system of political funding. These bearer instruments function essentially as promissory notes, allowing individuals and corporations to donate funds to political parties of their choice while maintaining a level of anonymity. Unlike traditional methods where donations are made through cheques or electronic transfers, electoral bonds provide a layer of confidentiality to the donors.

One of the touted advantages of electoral bonds is the elimination of black money from political funding. The bonds are issued in denominations ranging from INR 1,000 to INR 1 crore and can be purchased from authorized banks. The recipient political parties can encash these bonds in their designated bank accounts within a specified window. This mechanism aims to bring transparency by formalizing the donation process.

However, critics argue that the anonymity afforded by electoral bonds undermines the very essence of transparency. With no disclosure of the donor’s identity, there is a concern that political parties might be influenced by undisclosed interests, eroding the democratic principles of accountability and fairness.


Electoral Trusts: A Systematic Approach

Electoral Trusts, on the other hand, are entities set up with the sole purpose of managing and disbursing funds to political parties. These trusts act as intermediaries between the donors and the political parties, providing a structured framework for political contributions. Unlike electoral bonds, electoral trusts do not provide the same level of anonymity to donors, as their details are disclosed in the trust’s annual report.

Electoral Trusts are mandated to adhere to strict guidelines outlined by the Election Commission of India. These guidelines include the requirement that the trust should have a specified duration of existence, and the contributions it receives should be disbursed within a stipulated timeframe. This ensures a systematic and regulated approach to political funding, fostering accountability and reducing the scope for misuse.

One notable aspect of electoral trusts is the mandatory disclosure of contributions in the annual report. This transparency allows citizens to scrutinize the funding sources of political parties, contributing to a more informed electorate.


Comparative Analysis:

  1. Anonymity vs. Transparency:

   – Electoral Bonds: The anonymity provided by electoral bonds has been a point of contention. While it safeguards the privacy of donors, critics argue that it compromises the transparency necessary for a healthy democracy.

   – Electoral Trusts: The structured approach of electoral trusts leans towards transparency, as donors’ details are disclosed in the trust’s annual report. This allows for greater accountability and scrutiny.


  1. Ease of Access:

   – Electoral Bonds: The purchase of electoral bonds is relatively straightforward, as they can be bought from authorized banks in varying denominations. This ease of access has contributed to their popularity among donors.

   – Electoral Trusts: Contributing to an electoral trust involves a more intricate process, with donors having to align with the trust’s guidelines. This might pose a barrier for some potential contributors.


  1. Regulatory Compliance:

   – Electoral Bonds: While electoral bonds are regulated, concerns persist about the potential misuse of funds due to the anonymity of donors. Striking the right balance between privacy and accountability remains a challenge.

   – Electoral Trusts: The regulatory framework surrounding electoral trusts ensures that funds are managed systematically and disbursed within the specified timeframe, minimizing the risk of misuse.


Controversies Surrounding Electoral Bonds:

The introduction of electoral bonds has sparked a series of controversies. One of the primary concerns is the potential for these bonds to become a tool for money laundering. The lack of disclosure regarding the identity of donors makes it challenging to trace the origins of funds, raising suspicions about the legitimacy of the contributions.

Furthermore, the disproportionate distribution of electoral bonds among political parties has been criticized.



In the intricate landscape of political funding in India, both electoral bonds and electoral trusts strive to strike a balance between privacy and transparency. While electoral bonds provide a relatively straightforward mechanism for donors, concerns about anonymity and the potential for misuse persist. On the other hand, electoral trusts, with their structured approach and mandatory disclosures, offer a more transparent avenue for political contributions.

As India continues to evolve its democratic processes, the debate surrounding electoral bonds and electoral trusts underscores the importance of finding a delicate equilibrium. The challenge lies in devising a system that fosters political funding while upholding the principles of accountability, fairness, and transparency – the cornerstones of a thriving democracy.

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