Electoral Bonds: Supreme Court's Ruling

The Supreme Court of India recently delivered a significant judgment regarding electoral bonds, ruling certain aspects of the scheme unconstitutional. Introduced by the Government of India in 2018, electoral bonds were aimed at facilitating transparent political funding. Under this scheme, individuals and corporations could anonymously donate money to political parties by purchasing these bonds from authorized banks. The bonds could then be transferred to the political party of choice, which could en-cash them. However, the key contention arose from the anonymity of donors, as their identities were not disclosed to the public or the receiving party. The court's decision marks a crucial development in the realm of political financing, shedding light on the complexities surrounding transparency and accountability in electoral funding mechanisms.

The Supreme Court's decision to declare certain aspects of the electoral bond scheme unconstitutional was influenced by several key reasons. Firstly, the court emphasized the lack of transparency inherent in the scheme, noting that the anonymity provided to donors undermined the transparency of political funding, a vital aspect of democracy. Secondly, concerns were raised about the potential for corruption and illicit funding facilitated by the secrecy surrounding donors' identities, which could lead to quid pro quo arrangements between donors and political parties, thereby undermining the democratic process. Additionally, the court observed that electoral bonds could create an uneven playing field by granting preferential treatment to parties with access to wealthy donors, thus distorting the political landscape. Lastly, the lack of disclosure regarding donors' identities was viewed as infringing upon citizens' right to access information, essential for holding political parties accountable.

The government defends the introduction of electoral bonds as a measure to enhance transparency in political funding, addressing concerns about untraceable cash-based donations that could foster corruption and black money in politics. According to the government, electoral bonds offer a transparent and legitimate avenue for political contributions by channeling donations through banking channels. Donors are mandated to purchase bonds from authorized banks, thereby ensuring the traceability of funds. Additionally, the government underscores the significance of safeguarding the privacy and security of donors, asserting that electoral bonds enable individuals and corporations to contribute to political parties without fear of reprisal or harassment, as their identities remain confidential.

In summary, the recent Supreme Court judgment on electoral bonds highlights concerns about transparency and accountability in political funding. While the government introduced electoral bonds to enhance transparency, the court found certain aspects unconstitutional due to concerns about donor anonymity and potential corruption. Despite the government's defense of electoral bonds as a means to curb corruption and protect donor privacy, the ruling underscores the need for robust safeguards to uphold democratic principles in political financing. Moving forward, policymakers must address these concerns and ensure transparent mechanisms for political funding that uphold the integrity of India's democratic institutions.

*This article is authored by Arjun Gupta , Chief Financial Officer, Lawpinion and reviewed by Radhika Bhargava , Chief Editor, Lawpinion . Views expressed are personal.