SC Strikes Down Electoral Bonds: Curtains Drawn on Anonymous Political Funding

On February 15, 2024, the Supreme Court of India delivered a landmark judgment, unanimously striking down the Electoral Bond Scheme introduced by the government in 2018. The scheme, which allowed anonymous donations to political parties through bearer bonds, was hailed by the government as a reform towards transparency and curbing black money in political funding. However, the apex court found it incompatible with the right to information and transparency in electoral processes.

Key Arguments Against the Scheme:

• Violation of Right to Information: The court held that anonymity offered by electoral bonds infringed upon the citizen's right to know about their elected representatives' funding sources. This lack of transparency, they argued, undermines accountability and facilitates undue influence on political parties.
• Opacity in Funding: The court raised concerns about the lack of information regarding the identity of donors and the potential for misuse by opaque entities like shell companies. This could have implications for electoral integrity and create breeding grounds for corruption.
• Impact on Level Playing Field: Critics argued that the scheme disproportionately benefits larger, established parties with easier access to anonymous donors, disadvantaging smaller parties and independent candidates.

The Court's Verdict:

The 5-judge bench, led by Chief Justice D.Y. Chandrachud, unanimously declared the scheme unconstitutional, citing its incompatibility with the Right to Information under Article 19(1)(a) of the Constitution. The court directed the State Bank of India (SBI) to stop issuing electoral bonds and submit details of all previously issued bonds to the Election Commission of India (ECI). The ECI, in turn, was ordered to publish this information on its website.

Implications and Reactions:

The verdict has sparked reactions from various quarters. Critics of the scheme hailed it as a victory for transparency and accountability in Indian democracy. Political parties opposed to the ruling expressed concerns about the potential impact on their funding, particularly smaller parties reliant on anonymous donations. Legal experts anticipate further legal challenges regarding the fate of previously collected funds and the ECI's role in ensuring future transparency in electoral financing.

The Way Forward:

The Supreme Court's verdict has reignited the debate on electoral reforms in India. While the anonymity offered by electoral bonds has been struck down, the issue of ensuring transparency and reducing black money in political funding remains. Going forward, policymakers and stakeholders need to explore alternative solutions that balance legitimate concerns about funding sources with the right to information and a level playing field in elections. This could involve stricter reporting requirements for political parties, exploring public funding options, and strengthening enforcement mechanisms to curb illegal funding practices.