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KF Mentor
In a historic ruling on February 15, a five-judge bench of the Supreme Court unanimously declared the electoral bond scheme as 'unconstitutional.' The decision came after careful consideration of arguments from both sides, ending a seven-year legal battle initiated by the Association for Democratic Reforms (ADR) in 2017.
On the other hand, the government defended the scheme, highlighting that before the introduction of electoral bonds, political parties were not obliged to disclose the sources of their donations. Parties were only required to declare donations exceeding Rs 20,000. The government pointed to ADR's report, indicating that 69 percent of political donations came from "unknown sources." Anonymity in electoral bonds, according to the government, was introduced to protect an individual's political alignment and allow political parties to raise funds through recognized sources.
Furthermore, the Election Commission (EC) was instructed to make public details of the purchase and cashing of electoral bonds by political parties. This move was said to be essential to uphold voters' right to information, enabling them to make informed decisions during elections.
As a consequence of the ruling, the State Bank of India is required to submit details of electoral bond purchases and money taken by political parties to the Election Commission by March 6. The Election Commission, in turn, is tasked with publishing these details on its website one week after receiving the information.
Understanding Electoral Bonds
Electoral bonds, introduced in 2017 and formally launched in 2018, were designed as instruments to bring transparency to electoral funding in India. These bonds, available in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, allowed individuals to donate money to political parties while maintaining their anonymity. The State Bank of India (SBI) was mandated to issue these bonds, providing a channel for political contributions.The Controversy
The electoral bond scheme faced challenges from various quarters, including the ADR, the Communist Party of India (Marxist), Congress leader Jaya Thakur, and Spandan Biswal. They contended that the lack of transparency in the scheme undermined the democratic process and created an uneven playing field between the ruling party and the opposition.Key Arguments
Opponents argued that electoral bonds eroded the foundations of democracy by operating in a non-transparent manner. They contended that the scheme provided an unfair advantage to the ruling party, compromising the integrity of the electoral process.On the other hand, the government defended the scheme, highlighting that before the introduction of electoral bonds, political parties were not obliged to disclose the sources of their donations. Parties were only required to declare donations exceeding Rs 20,000. The government pointed to ADR's report, indicating that 69 percent of political donations came from "unknown sources." Anonymity in electoral bonds, according to the government, was introduced to protect an individual's political alignment and allow political parties to raise funds through recognized sources.
Supreme Court Verdict
The Supreme Court, in its landmark ruling, held that the electoral bond scheme violated Article 19 of the Constitution by failing to disclose political party funding. The court struck down provisions related to electoral bonds in the Companies Act, Income Tax Act, and Representation of the People Act. The State Bank of India, responsible for issuing the bonds, was directed to cease their issuance immediately.Furthermore, the Election Commission (EC) was instructed to make public details of the purchase and cashing of electoral bonds by political parties. This move was said to be essential to uphold voters' right to information, enabling them to make informed decisions during elections.
Implications and Next Steps
With the electoral bond scheme declared unconstitutional, questions arise about the future of political funding in India. The decision prompts a reevaluation of existing laws and regulations governing campaign financing.As a consequence of the ruling, the State Bank of India is required to submit details of electoral bond purchases and money taken by political parties to the Election Commission by March 6. The Election Commission, in turn, is tasked with publishing these details on its website one week after receiving the information.
