{"id":44611,"date":"2025-01-20T06:17:43","date_gmt":"2025-01-20T00:47:43","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=44611"},"modified":"2025-10-08T11:35:00","modified_gmt":"2025-10-08T06:05:00","slug":"electoral-trusts-surge-post-electoral-bond-ban","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/electoral-trusts-surge-post-electoral-bond-ban\/","title":{"rendered":"Electoral Trusts Surge Post Electoral Bond Ban: Transparency and Benefits"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in News?<\/li>\n<li>What are Electoral trusts?<\/li>\n<li>Benefits of Electoral Trusts Over Electoral Bonds<\/li>\n<li>Surge in Donations to Political Parties Through Electoral Trusts<\/li>\n<\/ul>\n<h2><strong>Why in News?<\/strong><\/h2>\n<p>As per the electoral trust contribution reports released by the Election Commission of India (ECI), donations to political parties saw a significant increase through electoral trusts after the Supreme Court\u2019s decision to scrap <a href=\"https:\/\/vajiramandravi.com\/current-affairs\/electoral-bonds-supreme-courts-verdict\/\" target=\"_blank\">electoral bonds<\/a> in February 2024.<\/p>\n<h2><strong>What are Electoral trusts?<\/strong><\/h2>\n<ul>\n<li><strong>About<\/strong>\n<ul>\n<li>Electoral trusts are non-profit organizations created to facilitate transparent political funding in India.\u00a0<\/li>\n<li>They act as intermediaries, collecting voluntary contributions from individuals or companies and distributing them to registered political parties.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Companies which can establish electoral trusts<\/strong>\n<ul>\n<li>Any company registered under section 25 of the Companies Act, 1956, can seek approval to form an electoral trust.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Creation<\/strong>\n<ul>\n<li>The concept was introduced under the Income Tax Act, 1961, through Section 13B, which provides tax benefits to donors.\u00a0<\/li>\n<li>The Election Commission of India (ECI) regulates electoral trusts, and their functioning is governed by the <strong>Electoral Trusts Scheme, 2013<\/strong> introduced by the Ministry of Finance.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Who Can Donate<\/strong>\n<ul>\n<li>Indian citizens.<\/li>\n<li>Domestic companies registered under the Companies Act, 2013.<\/li>\n<li>Donors are required to disclose their identity and the amount contributed.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Who Cannot Donate<\/strong>\n<ul>\n<li>Foreign companies or individuals.<\/li>\n<li>Government companies.<\/li>\n<li>Entities prohibited under the Representation of the People Act, 1951, such as trusts that receive foreign funds.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Issues<\/strong>\n<ul>\n<li><strong>Transparency Concerns<\/strong>: While trusts disclose the donors&#8217; names, the specific amounts donated to each political party are not publicly available.<\/li>\n<li><strong>Corporate Influence<\/strong>: Large corporate donors dominate the trust system, raising concerns about undue political influence.<\/li>\n<li><strong>Inequitable Distribution<\/strong>: A significant portion of the funds goes to ruling or major political parties, sidelining smaller ones.<\/li>\n<li><strong>Lack of Donor Diversity<\/strong>: Contributions are primarily from a limited number of large corporations, leading to concentration of influence.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Benefits of Electoral Trusts Over Electoral Bonds<\/strong><\/h2>\n<ul>\n<li><strong>Transparency in Donations<\/strong>\n<ul>\n<li>Electoral trusts are legally required to disclose the names of donors and the amounts received to the ECI.<\/li>\n<li>Electoral bonds, on the other hand, allow anonymous donations, making it difficult to trace the source of funds.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Accountability of Political Parties<\/strong>\n<ul>\n<li>Electoral trusts mandate disclosure of the contributions disbursed to political parties. This ensures that the public knows which party received how much funding.<\/li>\n<li>Electoral bonds do not require such disclosures, limiting accountability.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Regulatory Oversight<\/strong>\n<ul>\n<li>Electoral trusts are governed by the Electoral Trusts Scheme, 2013, and their operations are closely monitored by the ECI, ensuring adherence to legal guidelines.<\/li>\n<li>Electoral bonds are managed by banks, with little transparency about regulatory scrutiny.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Prevention of Foreign Influence<\/strong>\n<ul>\n<li>Electoral trusts prohibit foreign donations, reducing the risk of foreign interference in Indian politics.<\/li>\n<li>Electoral bonds do not explicitly restrict foreign-controlled entities registered in India from purchasing bonds, raising concerns about foreign influence.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Surge in Donations to Political Parties Through Electoral Trusts<\/strong><\/h2>\n<ul>\n<li><strong>About the news<\/strong>\n<ul>\n<li>The Supreme Court&#8217;s February 15, 2024, ruling to scrap the electoral bonds scheme led to a significant shift in corporate political donations, redirecting them to the electoral trust route.<\/li>\n<li>Electoral Trust, the largest contributor, witnessed a sharp surge in donations during the subsequent months, highlighting a diversion of funds from bonds to trusts.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Transparency in Electoral Trusts vs Electoral Bonds<\/strong>\n<ul>\n<li>Unlike the anonymity of electoral bonds, trusts are required to disclose donor names and amounts distributed to political parties.\u00a0<\/li>\n<li>However, the exact allocation of individual corporate contributions to specific parties is not revealed.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q.1. What is Electoral Trust in Income Tax?\u00a0<\/strong><\/h3>\n<p>Electoral trusts are non-profit organizations under the Income Tax Act that facilitate transparent political funding by collecting donations and distributing them to political parties.<\/p>\n<h3><strong>Q.2. What are the examples of Electoral Trust?\u00a0<\/strong><\/h3>\n<p>Examples include the Bharatiya Electoral Trust and the Association for Democratic Reforms, which channel donations to political parties transparently.<\/p>\n<h3><strong>Q3. What is Electoral Trust Scheme?<\/strong><\/h3>\n<p>Introduced in 2013, the Electoral Trust Scheme governs the creation and operation of electoral trusts, ensuring transparency in political donations through regulation by the Election Commission of India.<\/p>\n<h3><strong>Q4<\/strong>. <strong>Why Electoral Bond Was Declared Unconstitutional?<\/strong><\/h3>\n<p>The Supreme Court declared electoral bonds unconstitutional in February 2024 due to concerns over anonymity, lack of transparency, and the potential for corporate influence on political parties.<\/p>\n<h3><strong>Q5. What are Electoral Bonds in India?<\/strong><\/h3>\n<p>Electoral bonds are financial instruments introduced in 2018 for anonymous donations to political parties. While legal, they lack transparency, leading to concerns about unaccounted funding.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/india\/electoral-bond-ban-corporate-donors-political-parties-sc-9786916\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/timesofindia.indiatimes.com\/india\/india-inc-donations-via-electoral-trusts-surged-after-bonds-nixed\/articleshow\/117364054.cms\" target=\"_blank\" rel=\"nofollow noopener\">TOI<\/a> | <a href=\"https:\/\/www.deccanherald.com\/india\/explained-what-are-electoral-trusts-and-how-do-they-work-1176801.html\" target=\"_blank\" rel=\"nofollow noopener\">DH<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Explore how the scrapping of electoral bonds led to a surge in donations through electoral trusts. Learn about their benefits, transparency, and regulation in political funding.<\/p>\n","protected":false},"author":5,"featured_media":44612,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-44611","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/44611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=44611"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/44611\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/44612"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=44611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=44611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=44611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}