In a landmark ruling, the Supreme Court of India recently nullified the electoral bonds scheme, declaring it unconstitutional and in violation of the fundamental right to information guaranteed to citizens. The decision, rendered by a constitution bench led by Chief Justice D.Y. Chandrachud, has significant implications for political financing in India, particularly in the context of the upcoming general elections.
The scheme, introduced during the 2017 Union budget, was initially touted as a revolutionary step towards ensuring cleaner campaign finance. It allowed individuals and domestic companies to anonymously donate to political parties through bonds purchased from the State Bank of India (SBI). These bonds, which did not disclose the identity of the donor or the recipient, aimed to protect donors from potential retaliation while attempting to curb the flow of black money into political funding.
However, the scheme quickly became a subject of controversy, with critics arguing that it compromised transparency and the electorate’s right to know who funds political parties. The Supreme Court’s judgment specifically addressed these concerns, stating that the amendments made to facilitate the scheme infringed upon citizens’ right to information, a fundamental aspect of a democratic society.
As part of its directive, the court has ordered SBI to cease the issuance of electoral bonds with immediate effect. Moreover, the bank is required to furnish the Election Commission of India (ECI) with comprehensive details of all bonds purchased since the Supreme Court’s interim order dated April 12, 2019. This information, including the identities of the purchasers, the amounts donated, and the dates of purchase, must be submitted by March 6 and subsequently made public by the ECI by March 13.
The impact of the Supreme Court’s decision cannot be overstated. Between March 2018 and January 2024, electoral bonds generated a staggering ₹16,518.11 crore, according to the Association for Democratic Reforms (ADR), highlighting the scheme’s significant role in political financing. The judgment thus marks a pivotal moment in the quest for greater transparency and fairness in electoral funding.
The ruling has been met with widespread approval from various quarters. S.Y. Quraishi, a former chief election commissioner, lauded the judgment as a monumental victory for democracy, emphasizing its potential to restore public faith in the democratic process. Opposition parties, long critical of the scheme, have also welcomed the decision, viewing it as a triumph for transparency and electoral fairness. Prominent voices, including Congress party leader P. Chidambaram, have highlighted the ruling’s affirmation of the public’s right to information over legal maneuvers aimed at defending the opaque scheme.
The Bharatiya Janata Party (BJP), which was the largest beneficiary of the scheme, has downplayed the verdict, emphasizing respect for the Supreme Court’s decisions. Despite the criticism, the party’s spokesperson reiterated the government’s commitment to transparency and good governance.
The Supreme Court’s ruling also carries specific directives regarding the handling of electoral bonds. Unencashed bonds, still within their 15-day validity period, must be returned by political parties, with the issuing bank refunding the purchasers. All such transactions are to be disclosed on the ECI’s website by March 31.
Furthermore, the judgment opens the door to alternative methods for curbing black money in politics, challenging the notion that electoral bonds were the sole solution. The court’s analysis revealed that the scheme, by anonymizing contributions, potentially facilitated quid pro quo arrangements, undermining the integrity of the political process.
Legal experts have clarified that the judgment does not affect political funding per se but removes the anonymity feature of the electoral bonds scheme. Political entities can still receive funds directly, provided they comply with existing regulations on corporate donations and other legal provisions.
This ruling represents a critical step towards enhancing transparency in political financing, a cornerstone for the functioning of any vibrant democracy. By striking down the electoral bonds scheme, the Supreme Court has underscored the importance of the electorate’s right to information, paving the way for more accountable and transparent political funding mechanisms in the future.