ETs Scheme and Electoral Bonds: A Closer Look

In 2013, the Indian government introduced the Electoral Trust (ET) scheme to facilitate donations to political parties by corporates and individuals. The scheme was designed to bring transparency to political funding and encourage legitimate contributions to political parties. In this article, we will explore the intricacies of the ET scheme, its purpose, eligibility criteria for donors, reporting requirements, and the use of Electoral Bonds to ensure donor anonymity.

What is the Electoral Trust (ET) scheme?

The Electoral Trust (ET) scheme is a mechanism that allows both Indian citizens and India registered companies to donate funds to political parties. This mechanism was established with the aim of streamlining the process of political funding and ensuring that donations to political parties are transparent, legal, and accountable.

The purpose of the ET scheme

The primary purpose of the ET scheme is to fund political parties that are registered under the Representation of the People Act, 1951. To achieve this, Electoral Trusts are mandated to allocate a minimum of 95% of the contributions they receive in a financial year to such political parties. This ensures that the funds are directed towards legally recognized and authorized entities in the Indian political landscape.

Eligibility of donors under the ET scheme

The ET scheme welcomes contributions from Indian citizens and India registered companies. These donors play a pivotal role in financially supporting political parties, contributing to the democratic process, and promoting transparency in political funding.

Reporting requirements for ETs

To maintain transparency, ETs are required to submit detailed reports to the Election Commission of India. These reports include information about contributions received from individuals and companies, as well as the donations made to political parties. This mandatory reporting ensures that all financial transactions are above board and can be audited by the authorities.

Anonymity through the Electoral Bond scheme

While the ET scheme enhances transparency, the Electoral Bond scheme was introduced to provide anonymity to donors. Electoral Bonds allow contributors to make donations without disclosing their identity to the public or the political parties receiving the funds. This added layer of confidentiality is intended to protect the privacy of donors, preventing any potential repercussions for their political preferences.

Transparency concerns

The ET scheme has faced criticism for the lack of complete transparency, particularly when it comes to Electoral Bonds. Critics argue that the anonymity of donors can lead to potential misuse and an unaccounted flow of funds to political parties. Balancing anonymity with accountability remains a significant challenge.

The impact of the ET scheme on Indian politics

The ET scheme has had a notable impact on Indian politics by regulating and legitimizing the flow of funds to political parties. This has helped parties reduce their reliance on unaccounted funds and has led to greater transparency in political financing.

Criticisms and controversies

Despite its positive impacts, the ET scheme has not been without controversy. Critics have pointed out instances where the scheme may have been used to funnel money to political parties for ulterior motives. These allegations highlight the importance of ongoing scrutiny and oversight.

Legal framework and amendments

The ET scheme is governed by a legal framework, and amendments have been made over the years to address evolving concerns. These changes aim to strike a balance between the need for political funding and the necessity for transparency and accountability.

The role of corporate donations

Corporate donations play a significant role in the ET scheme. Large corporations often contribute substantial amounts to political parties, which can influence political decisions and policies. This involvement of corporations in the political process raises questions about potential conflicts of interest.

Political implications

The ET scheme has political implications as well. Political parties rely on donations from various sources to fund their activities and campaigns. The ability to access funding through ETs can impact the financial health and competitiveness of these parties.

Pros and cons of the ET scheme


  • Enhances transparency in political funding
  • Encourages legitimate contributions
  • Reduces the reliance on unaccounted funds
  • Regulates the flow of money to political parties


  • Concerns about donor anonymity
  • Potential misuse of funds
  • Need for ongoing oversight and amendments


The Electoral Trust (ET) scheme is a crucial part of India's political funding landscape, designed to bring transparency and legitimacy to political donations. While it has made significant strides in achieving these goals, challenges remain in balancing donor anonymity with accountability. The ongoing debate surrounding the ET scheme highlights the importance of continually refining the system to uphold the principles of democratic governance.

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