Former RBI Governor Raghuram Rajan, a critic of the Narendra Modi-led administration at the Centre, has argued that electoral bonds are a horrible manner of funding elections because the State Bank of India (SBI) is the only one who knows who donated what.

"Electoral bonds are opaque methods of financing political parties." Nobody knows who supplied the money or what they got in exchange. So, how can it be considered a transparent method of financing? We will never know who paid Rs 1,000 crore to the party if an industrialist does."

Rajan stated in an interview with The Red Mike, "It is worse than cash because the only people who know who donated are the State Bank of India (SBI)." It is unclear how much information is kept hidden in such circumstances. How much does the government know about who donated to whom? All of this makes these bonds an unequal type of donation because the government can always summon those who gave money to the opposition. That is my concern. That doesn't imply it's happening right now." He went on to say that in such cases, opposition parties are "forced" to employ illicit funds since electoral bonds create an unequal playing field in favour of the incumbent party.

In reference to the unaccounted cash discovered from Congress Rajya Sabha MP Dhiraj Prasad Sahu of Jharkhan, Rajan stated, "Like recently, so much money was recovered from the MLA." Money is used to fight elections. These individuals can write checks, whilst the others must accept cash. You are establishing an unequal playing field by requiring money to come here and checks to go there (to the ruling party). Then you assign ED and CBI to find those folks. This is not a democratic process."

Electoral bonds, which were introduced in 2018, are interest-free bearer bonds or money instruments that may be purchased in India by firms and individuals via authorised State Bank of India (SBI) offices. There are multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore accessible. Donors can buy these bonds using a KYC-compliant account to donate to a political party. Political parties must cash them within a certain time frame.

Prior to electoral bonds, there was the Electoral Trusts (ET) Scheme, which was implemented by the UPA government in 2013. While the Electoral Bond plan tries to protect the donor's anonymity, the old scheme obliged electoral trusts to produce a report on contributions from individuals and corporations, as well as donations to parties, to the Election Commission of India every year.

The Supreme Court stated in November that the electoral bond scheme of political fundraising has "serious deficiencies." Instead of "putting a premium on opacity," the Supreme Court suggested that the Union government consider establishing a new tailor-made system that balances proportionality and prepares the way for a level playing field.

The Income Tax Department recently recovered Rs 351 crore during raids at the home of Congress MP Dheeraj Sahu. On Wednesday, the income tax authority raided the premises and discovered stacks of notes kept in almirah racks. Due to normal working hours, the counting could not be completed during the weekdays. It was finished over the weekend. The I-T raids took place at Boudh Distilleries Private Limited locations in Odisha, Jharkhand, and West Bengal. The Congress stated that the party has no role in the MP's company and that he should explain the large sum of money.

Rajan, the Katherine Dusak Miller Distinguished Service Professor of Finance at The University of Chicago Booth School of Business, is in India to promote the publication of his new book, Breaking the Mould. The new book, co-authored by Rajan and economist Rohit Lamba, is about their vision of the Indian economy.

Rajan stated that he is sceptical about India's current economic trajectory, even though the stock market is flourishing and equities investments are paying off, because the buoyancy is attributable to global factors such as waning recession worries and the diversion of EM flows from China to India.

According to NSDL data, India is in a favourable position because foreign investors have put almost $16 billion into Indian stocks so far in the calendar year 2023. China's new foreign investment, on the other hand, fell to its lowest level in 25 years in the second quarter.