In a landmark judgment, the Supreme Court on Thursday unanimously struck down the electoral bonds scheme, calling it unconstitutional and arbitrary. The 5-judge Constitution bench held that the scheme violates citizens’ right to information under Article 19(1)(a) of the Constitution.

What are Electoral Bonds and Why Were They Introduced?

Electoral bonds are financial instruments used to donate money anonymously to political parties. The scheme was introduced by the government in 2018 to promote transparency in political funding and tackle the menace of black money in elections.

However, the bonds provided complete anonymity to donors, even allowing foreign companies to donate secretly to Indian parties. The government defended this secrecy on grounds that donors might face backlash if rival parties came to power.

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Key Highlights of the Judgment

– The court directed the State Bank of India to immediately stop issuing electoral bonds. Banks have also been ordered to share bond purchase data with the Election Commission.

– All amendments made to the Income Tax Act, the Representation of People Act, and the Companies Act to introduce electoral bonds have been struck down.

– The judgment, authored by CJI DY Chandrachud, said voter anonymity cannot override transparency in political funding. Citizens have a right to know the source of money that funds parties which seek to form governments.

Implications of the Verdict

  • The ruling comes as a setback to the BJP, which reportedly received more than 60% of the Rs 6,000+ crore worth of bonds purchased so far.
  • With donor anonymity now removed, companies may revert to cash donations due to fear of rivalry. But voters can now clearly see funding sources before casting votes.
  • The order reinforces electoral transparency over donor privacy. It remains to be seen if the government brings in a new law addressing concerns raised by the court.

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Why Did the Court Find the Scheme Unconstitutional?

No Level Playing Field for Parties

The court held that voter anonymity under the bonds scheme went against free and fair elections, as it prevented a level playing field between parties. The party in power could misuse bonds to attract more donations from corporate groups at the cost of rival parties.

Infringes Right to Information

By hiding the donor’s name, bonds infringe upon citizens’ right to information under Article 19(1)(a). Voters have a right to know the funding sources of parties seeking their vote. This enables them to make informed choices.

May Enable Quid Pro Quo

Anonymous bonds open the door for quid pro quo – donors can secretly donate huge sums to ensure special favours if a party comes to power. This subverts transparency and public interest.

Appeasement of Donors

The court ruled that parties may unduly appease anonymous donors to attract more funds from them. This compromises accountability and leads to policies favouring donors rather than the public.

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The apex court’s decision is a landmark step towards electoral transparency. By placing citizens’ right to information over donor anonymity, the verdict aims to prevent the undue influence of money power on the country’s democratic fabric. However, ensuring clean political funding remains a challenge considering donors may now revert to cash donations. The ball is now in the government’s court to bring in a new law addressing the concerns raised by the Supreme Court.


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