Finance Ministry officials have began negotiations about developing a new scheme to replace the now-defunct electoral bonds system, which the Supreme Court found illegal.

Officials from the Department of Economic Affairs, the Income Tax Department, and the Ministry of Corporate Affairs have conducted an initial meeting to examine a prospective new system that would allow firms to fund political parties. "Subsequently, officials from the Law ministry will also be roped in as the ideas gain structure" , a ministry official said.

A new scheme may only be declared in the Finance Act, which is part of the union budget due in July after a new government takes office following the Lok Sabha elections.

"The discussions are at a very preliminary stage at present, but the idea is for a new scheme that addresses the deficiencies of the defunct one," a spokesperson for the administration stated.

Another insider stated that potential changes include barring loss-making shell corporations from funding political parties. Recently leaked data indicated that at least 16 loss-making corporations obtained electoral bonds. Amendments to the Companies Act in 2017 abolished restrictions, including a limit of contributing only 7.5% of a company's average profit over the previous three fiscal years.

In a recent interview with Chennai-based Thanthi TV, PM Narendra Modi stated that "no system is perfect." There may be problems that could be improved."

Finance Minister Nirmala Sitharaman responded to a question at the India Today Conclave about blocking loss-making and shell businesses from political fundraising, saying, "There are challenges on that front. We should look at these. You cannot have shell corporations and loss-making businesses doing this."

"It's not a perfect system, but we have moved from a system where everyone did what they want to do," she stated. She went on to say, "A system which was not perfect, from a system which was completely imperfect, was brought in."