The Supreme Court has struck down the Central Government’sElectoral Bond (EB) scheme of political funding, declaring it as “unconstitutional”.
The Electoral Bond scheme, which was announced at the 2017 Union Budget allowed individuals/corporations to donate money to political parties anonymously by purchasing electoral bonds from the State Bank of India (SBI). It was promoted as a solution to the issue of opacity in political parties funding.
The scheme was criticized and arguments were raised about citizen’s right to information before voting. It was also questioned as to how the scheme would distinctly favour that time’s ruling government as the guarantee of anonymity would allow the party to provide concessions and companies could then use this to “funnel money” to political parties without informing the shareholders.
Thus, the Supreme Court struck down the Central Government electoral bond (EB) scheme and declared it to be “unconstitutional” as it completely anonymized contributions made to political parties and added a layer of illegal election financing to the procedure.
The following reasons were given while declaring it to be unconstitutional –
Violation of Right to Information ( AStatutory Right)
By promoting anonymity, it violates the citizen’s right to information and raises a possibility of misuse by the funding parties and the political parties.
Better alternatives
There are much better ways to approach the issue of black money, without violating the Right to Information of the citizens.
Right to Privacy
The court extended the Right to Privacy of Political Affiliation to contributions made as a genuine form of Political Support but does not extend to those contributions which may be made to influence policies.
A company is not equal to an individual.
A company has far graver influence on the political process than contributions by individuals. Contributions by companies are purely business transactions.
The Supreme Court even ordered full disclosure of donors and recipients of the Electoral Bonds issued since April 2019 on the website of Election Commission of India by 13th March 2024.
This decision was brought about by a 5 Judge Constitutional Bench, headed by the Chief Justice of India (CJI) Dhananjaya Y Chandrachud, ruling that amendments made in the Representation of the People Act, the Income Tax Act and the Companies Act through the 2017 finance act violated the constitutional right of the electors to access information on the funding of political parties “which is necessary to identify corruption and quid pro quo transactions and governance information.”
The decision of the Supreme Court was supported by members of the Congress party as it was openly opposed by them. The Supreme Court did not accept the opinion of the Government regarding the purpose of the Bonds, stating it was brought to reduce black money. The court was not satisfied regarding the way the scheme handled the privacy of the donors and the lack of transparency coupled with it.
The bench also discussed the issue of permitting unlimited corporate contributions to the political parties as it was deemed to be “manifestly arbitrary and violative of Article 14 (Right to equality). This rule made it possible for companies to have unconstrained influence over the electoral process. This also violated the principle of free and fair elections generating a close connection between money and politics, which was deemed to be toxic.
Prior to this decision, in 2018, EB’s were available to be purchased at any designated State Bank of India branches in multiples of Rs. 1000, Rs 10,000 Rs 1 Lakh, Rs 10 Lakh and Rs 1 Crore through any KYC compliant account. There was no set limit as per the maximum number of ballots a person could purchase.
A corporate or any foreign entity can make a donation under this scheme and enjoy 100% tax exemption and confidentiality. This was against the right to information and thereby was criticized by the bench.
This decision of the Supreme Court aims to cleanse the process and filter any inconsistencies and promote transparency in the election process.
