Initially, there were few regulations on party funding, leading to concerns about the influence of wealthy individuals and corporations. Discussions about state funding of elections began in the 1960s and 1970s. Amendments to the Representation of the People Act, 1951 introduced some regulations, but loopholes remained. The Indira Gandhi government banned company donations, which was later changed.

Electoral bonds are financial instruments for making donations to political parties anonymously. They can be purchased from authorized banks like SBI. The controversy stems from the lack of transparency, as the identity of the donor is not revealed. This raises concerns about potential quid pro quo arrangements and undue influence.

Challenges include loopholes in existing laws, difficulties in tracking sources of funds, lack of effective enforcement mechanisms, and the use of black money. The anonymity provided by instruments like electoral bonds also poses a significant challenge to transparency.

Suggested reforms include increasing transparency in electoral bond schemes, stricter enforcement of existing regulations, providing state funding of elections to reduce reliance on private donors, and empowering the ECI with more authority to investigate and penalize violations.

Initially, there were few regulations on party funding, leading to concerns about the influence of wealthy individuals and corporations. Discussions about state funding of elections began in the 1960s and 1970s. Amendments to the Representation of the People Act, 1951 introduced some regulations, but loopholes remained. The Indira Gandhi government banned company donations, which was later changed.

Electoral bonds are financial instruments for making donations to political parties anonymously. They can be purchased from authorized banks like SBI. The controversy stems from the lack of transparency, as the identity of the donor is not revealed. This raises concerns about potential quid pro quo arrangements and undue influence.

Challenges include loopholes in existing laws, difficulties in tracking sources of funds, lack of effective enforcement mechanisms, and the use of black money. The anonymity provided by instruments like electoral bonds also poses a significant challenge to transparency.

Suggested reforms include increasing transparency in electoral bond schemes, stricter enforcement of existing regulations, providing state funding of elections to reduce reliance on private donors, and empowering the ECI with more authority to investigate and penalize violations.