GD Topic - Funding Democracy: Are Electoral Bonds a Boon or Bane?

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Senior Executive - Editorial

Updated on Oct 14, 2025 11:37 IST

Candidates taking the MBA entrance exam must prepare for the Group Discussion Round as it is an important part of the MBA admission process. "Electoral Bonds" is one of the most debatable GD topics. Learn about Electoral Bonds and their positive and negative impact on the Indian Economy in this article.

GDs show how effectively a candidate can communicate under pressure. Students preparing for MBA admission have to appear for the Group Discussion and Personal Interview Round after clearing the entrance exam. Various MBA exams, such as CAT, XAT, SNAP, NMAT, MAH MBA CET, etc., conduct Group Discussion Rounds. Candidates must ensure thorough GD preparation to increase their chances of getting admission in MBA.

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Table of content

Funding Democracy: Are Electoral Bonds a Boon or Bane?
What are Electoral Bonds?
Electoral Bonds in India: Arguments in Favor and Against
Top Group Discussion (GD) Topics for MBA GD/PI

Funding Democracy: Are Electoral Bonds a Boon or Bane?

In India, political funding has long been a heated debate topic, especially when it comes to transparency, influence, and accountability in election campaigns. Late Arun Jaitley, the former Finance Minister, announced Electoral Bonds during the 2017 Budget Session. He introduced the electoral bonds scheme in January 2018. This scheme allows individuals, companies, and institutions to donate funds to political parties anonymously. The funds are donated through the banking system. The basic motive behind electoral bonds is to control the influence of black money in political donations and to ensure transparency. The Indian government believes that this system is a step towards transparency. However, many critics argue that electoral bonds open the door to non-transparent funding and corporate influence in politics.

For a Group Discussion (GD) on this topic, students can examine both perspectives and explore whether electoral bonds make political funding fair or unfair in India.

What are Electoral Bonds?

Electoral bonds are a unique approach to political funding. Any Indian citizen or corporate entity can purchase these bonds from the authorized branches of the State Bank of India (SBI). The purchase can be made during specified periods throughout the year. Once purchased, these bonds can be anonymously transferred to any political party’s account registered under Section 29A of the Representation of the People Act, 1951. The bonds are valid for 15 days after the date of issuance, and only political parties that secured at least 1% of the votes in the last general election are eligible to receive funds through this scheme. After 15 days, the donated money will go to the PM Relief Fund. This money can be used by the political party for its campaign.

A major issue in this system is that, since donations are made through banking channels, the public cannot access details about the donors or recipients. Thus, while the government and banks have access to donor information, the system remains anonymous to the public.

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Key Facts about Electoral Bonds

Any individual or company can purchase Electoral Bonds.
Electoral Bonds are issued in the multiples of ₹1,000; ₹10,000; ₹1,00,000; ₹10 Lakh; and ₹1 Crore.
There is no restriction on the electoral bond purchase quantity, removing previous restrictions that limited corporate donations to 7.5% of their net profits.
Only those political parties who are registered under Section 29A of the Representation of the People Act, 1951, with at least 1% previous votes can redeem the electoral bonds.
Electoral Bonds can be bought only at the authorized State Bank of India (SBI) branches via non-cash methods only.

Electoral Bonds in India: Arguments in Favor and Against

Electoral bonds were introduced in India to make political funding legal and reduce the impact of black money in elections. However, the anonymous nature of the system raises a question whether these electoral bonds ensure fair competition in democracy or empower the rich and corporate donors.

To understand this GD Topic, let us review some major arguments in favor and against Electoral Bonds as a Political Funding System.

Arguments in Favor of Electoral Bonds

Those in favor of electoral bonds believe that these are useful in the following ways:

A major portion of political donations in India was made in cash before electoral bonds. These donations were often derived from unidentified sources. Electoral bonds enable donations through banking channels. It helps in reducing the flow of black money during election campaigns.
Electoral bonds encourage corporate donations during elections by making it an anonymous activity. Companies can donate without the fear of backlash from rival political parties or stakeholders.
Many individuals and companies may hesitate to donate to parties publicly due to fear of consequences. Electoral bonds allow donors to support political causes without compromising their privacy or safety.
As electoral bonds are purchased through SBI, it ensures that all transactions are documented. This allows the government to track the source of funds without making this information public. It also helps reduce reliance on cash donations.
By formalizing donations, electoral bonds encourage political parties to engage in issue-based campaigns.

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Arguments Against Electoral Bonds

Many critics argue that electoral bonds are not good for an economy because of the following reasons:

Electoral bonds allow donors to remain anonymous to the public. This prevents citizens from knowing who funds which political party. This compromises their Right to Know (RTI). The lack of public transparency can reduce trust and result in conflicts of interest.
As electoral bonds bring anonymity, large corporations may donate substantial sums to parties in exchange for favorable policies. This can result in crony capitalism.
The removal of the 7.5% cap on corporate donations allows companies to contribute unlimited amounts. This may result in a situation where only the wealthiest donors can influence political parties.
Since political parties and donors remain undisclosed to the public, it might be difficult to hold parties accountable for possible conflicts of interest with their donors. This lack of accountability could lead to policy decisions that give priority to donor interests over public welfare.
A major part of the funds through electoral bonds goes to the ruling party. People might think that the system might favor the government and compromise fair competition among political parties.

Note: Crony Capitalism is an economic term used to describe a capitalist economic system where individuals and businesses have a Quid Pro Quo with political parties. This means individuals or corporations with close ties to the political parties and/or government officials use their connections to gain an unfair advantage in the marketplace.

Top Group Discussion (GD) Topics for MBA GD/PI

Candidates preparing for the Group Discussion Rounds for admissions in MBA at B-schools can check out the below GD topics:

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About the Author

Nupur Jain

Senior Executive - Editorial

Nupur is an experienced content writer with a specialized focus on Commerce students. Over the past three years, she has crafted engaging and insightful materials to help learners excel in their studies. Outside of Read Full Bio