In a landmark decision, the Supreme Court has struck down the Electoral Bonds scheme, deeming it unconstitutional. The unanimous verdict emphasises the importance of information for the right to vote and highlights the role of political parties in providing essential information to voters.
The five-judge Constitution bench, led by Chief Justice DY Chandrachud, declared the scheme unconstitutional, stating that voters have the right to essential information necessary for casting their votes. The bench also directed the Election Commission of India to publish details of Electoral Bond purchases on its website by March 13, 2024.
Electoral Bonds, introduced in January 2018, are financial instruments that individuals or corporate entities can purchase from a bank and present to a political party, which can then redeem them for funds. The scheme has been criticised for allowing anonymity in donations, potentially leading to corruption and lack of transparency in political funding.
What are Electoral Bonds?
Electoral Bonds (EBs) are financial instruments sold in denominations of Rs. 1,000 ($12) to Rs. 10 million ($120,000), akin to bearer instruments like currency notes. Individuals, groups, or corporate organisations can purchase these bonds and donate them to the political party of their choice. The receiving party can then redeem them, interest-free, after 15 days.
Unlike cash donations, where political parties must disclose donors contributing more than Rs. 20,000 ($240), the identity of donors using electoral bonds remains undisclosed, regardless of the donation amount. This anonymity has made EBs a popular method of political funding, with 56% of all political funding in India coming from EBs, according to an ADR report.
However, critics argue that this anonymity fosters a lack of transparency and could facilitate corruption. When the Modi government introduced this funding method, it eliminated several transparency measures, including a cap on corporate donations and the requirement for companies to disclose their donations. Foreign companies, previously barred from funding Indian parties, could now do so through their Indian subsidiaries.
How EB’s are benefiting the BJP
The BJP has been the largest beneficiary of electoral bond donations, receiving 57% of total donations between 2018 and March 2022, amounting to Rs. 5,271 crore (about $635 million). This dominance is partly attributed to rules stipulating that only the State Bank of India, a public sector bank, can sell these bonds, leading to concerns about unchecked government power and potential misuse of donor information.
Critics argue that while called electoral bonds, there are no restrictions on how the funds can be used, allowing recipients to utilise the money for various purposes, including media campaigns and advertising, potentially influencing electoral outcomes beyond just funding elections.
