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

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Senior Executive - Editorial

Updated on Nov 28, 2025 11:45 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.

Learn about Electoral Bonds and their positive and negative impact on Indian Economy in this article.

Electoral Bonds: Boon or Bane for Democracy

As a part of MBA admission process, group discussion checks communication skills, critical thinking and ability of a candidate to work in a team. During a Group Discussion, a group of participants is given a topic. They are expected to express their views and show leadership qualities. GDs show how a candidate can communicate under pressure. Students preparing for MBA admission have to appear for Group Discussion and Personal Interview Round after clearing entrance exam. Various MBA exams, such as CAT, XAT, SNAP, NMAT, MAH MBA CET, etc., conduct Group Discussion Rounds.

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Table of contents

Are Electoral Bonds a Boon or Bane?
What are Electoral Bonds?
Electoral Bonds in India
Top Group Discussion (GD) Topics for MBA GD/PI

Are Electoral Bonds a Boon or Bane?

The former Finance Minister, Late Arun Jaitley announced Electoral Bonds during 2017 Budget Session. He introduced 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 banking system. The basic motive behind electoral bonds is to control influence of black money in political donations and to make sure there is transparency. But, many critics say that electoral bonds open door to non transparent funding and corporate influence in politics.

What are Electoral Bonds?

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

But, as donations are made through banking channels, public cannot know about donors or recipients.

Also Read Union Budget 2024

Facts about Electoral Bonds

Any individual or company can purchase Electoral Bonds.
Electoral Bonds are issued in multiples of ₹1000, ₹10000, ₹100000, ₹10 Lakh and ₹1 Crore.
There is no restriction on electoral bond purchase quantity. It removes previous restrictions that limited corporate donations to 7.5% of their net profits.
Only political parties who are registered under Section 29A of the Representation of the People Act, 1951, with at least 1% previous votes can redeem electoral bonds.
Electoral Bonds can be bought only at approved State Bank of India branches via non cash methods only.

Electoral Bonds in India

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

Arguments in Favor of Electoral Bonds

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

A major part of political donations in India was made in cash before electoral bonds. These donations were often made from unidentified sources. Electoral bonds enable donations through banking channels. It helps in reducing flow of black money during election campaigns.
Electoral bonds encourage corporate donations during elections. Companies can donate without 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 makes sure that all transactions are documented. This allows government to track 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.

Also Read: GST Rate Changes After the 55th GST Council Meeting

Arguments Against Electoral Bonds

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

Electoral bonds allow donors to remain anonymous to public. This prevents citizens from knowing who funds which political party. This compromises their Right to Know or RTI. The lack of public transparency can reduce trust and result in conflicts of interest.
Large corporations may donate substantial sums to parties in exchange for favorable policies. This can result in crony capitalism.
The removal of 7.5% cap on corporate donations allows companies to contribute unlimited amounts. This may result in a situation where only wealthiest donors can influence political parties.
Since political parties and donors remain undisclosed to 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 funds through electoral bonds goes to ruling party. People might think that system might favor 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 Group Discussion Rounds for admissions in MBA can check below GD topics.

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Nupur Jain