Supreme Court's Landmark Ruling: Electoral Bonds Scheme Struck Down,
Calls for Transparency in Indian Politics
In a groundbreaking ruling, the Supreme Court of India has determined that the electoral bonds scheme violates the fundamental rights enshrined in the Constitution, specifically the right to information and the freedom of speech and expression. The court emphasised that the scheme's purported objective of tackling black money does not justify its encroachment on the rights of citizens to access information.
A Constitution bench led by Chief Justice D Y Chandrachud, comprising five judges, has mandated that the State Bank of India (SBI) disclose comprehensive information regarding each electoral bond redeemed by political parties.
This disclosure should encompass crucial details such as the date of redemption and the denomination of the bonds. The SBI is required to furnish this information to the Election Commission by March 6. Subsequently, the Election Commission is tasked with publishing these details on its website no later than March 13.
Chandrachud emphasised that political contributions afford contributors a privileged position in decision-making processes, granting them access and influence over policymaking.
The recent judgment highlighted the potential risks associated with providing financial assistance to political parties, noting that such support could give rise to reciprocal arrangements, thereby compromising the integrity of policymaking influenced by monetary contributions.
The Supreme Court underscored that while the electoral bonds scheme is one approach to address concerns about black money, it is not the exclusive solution. The court urged consideration of alternative measures to tackle this issue effectively.
India's Supreme Court has overturned the electoral bonds system, a seven-year-old method of election funding. This system permitted individuals and corporations to donate money to political parties anonymously and without restrictions.
The court's decision, coming just two months prior to the general election, is perceived as a setback for Prime Minister Narendra Modi's Bharatiya Janata Party (BJP), which has notably benefited from this system since its inception in 2017.
The secretive nature of the funding mechanism was contested by opposition parties and a civil society group, arguing that it impeded the public's right to transparency regarding the sources of political funding.
For years, critics have decried India's election campaign financing method as a murky avenue for channelling "black money" to political parties. However, the Modi government staunchly defended the policy, asserting that it curtailed the use of cash or illicit funds in political funding, providing donors with a confidential conduit to contribute to any party's coffers.
Undeclared individuals and companies purchased electoral bonds amounting to 165.18 billion rupees ($1.99bn) up to November 2023, as reported by the Association for Democratic Reforms (ADR), a non-governmental transparency watchdog focused on election funding in India.
A significant portion of these donations, over half, utilised the electoral bond scheme, with nearly 57 per cent flowing to the BJP between 2018 and March 2022. In contrast, the opposition Indian National Congress party received a mere 10 per cent.
Under this system, individuals or companies could purchase these bonds from the State Bank of India (SBI) in various denominations ranging from 1,000 rupees ($12) to 10 million rupees ($120,000) and allocate them to a chosen political party.
Initially introduced in early 2018, the bonds were then delivered to the respective party, which could be redeemed for cash. Notably, these bonds were exempt from taxation and did not disclose the identity of the donor. While cash donations remained permissible for elections, they did not enjoy tax exemptions.
Since their inception, electoral bonds have emerged as a significant avenue for political funding. Despite the anonymity of donors, concerns lingered that the government could potentially access data via the state-owned SBI.
Given the intricate connection between finance and politics, there was apprehension that financial contributions could result in reciprocal arrangements. The court, in reestablishing corporate donation limits, deemed the equal treatment of companies and individuals in this context as "manifestly arbitrary."
The court's order emphasised that the influence of companies in the electoral process, facilitated through political contributions, far outweighed that of individuals. It characterised contributions from companies as business transactions aimed at securing benefits in return.
While political parties might have already amassed substantial funds ahead of elections, the court's decision effectively halted potential further revenue generation through such means.
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