Electoral bonds were declared unconstitutional yesterday by the Supreme Court. The Supreme Court has delivered its conclusive verdict on the validity of electoral bonds ahead of the 2024 general elections. The Supreme Court has banned electoral bonds, terming them unconstitutional. Let’s understand what electoral bonds are, their benefits, and the reasons for their ban.

What were the electoral bonds?

Electoral bonds were a kind of promissory note. It was been purchased by any Indian citizen or company at selected branches of the State Bank of India. These bonds were a means for citizens or corporate companies to donate to any political party of their choice.

When were the electoral bonds introduced?

Electoral bonds were introduced with the Financial Bill (2017). On January 29, 2018, the Narendra Modi-led NDA government notified the Electoral Bond Scheme 2018. The very same day it was started.

When were electoral bonds available for sale?

Electoral bonds are made available for sale by the government at the beginning of every quarter for 10 days. In the meantime, their shopping was done. The first 10 days of January, April, July and October have been fixed for the purchase of the bonds by the government. Furthermore, there was a plan by the government to fix an additional period of 30 days in the year of Lok Sabha elections.

Purpose of the Electoral Bonds

While introducing electoral bonds, the government claimed that it would increase transparency in matters of political funding. Moreover, through this bond, donations could be made to the party of one’s choice.

Was there any return on investing in electoral bonds?

There was a provision to give exemption under sections 80GGC and 80GGB of income tax on the amount donated. Furthermore, an exemption was by donating through bonds and not donating directly to the political party.

Why the Supreme Court Banned the Electoral Bonds?

The Supreme Court of India recently banned the Electoral Bond Scheme on February 15, 2024. Furthermore, the verdict regarding the Electoral Bond Scheme was delivered by a five-judge bench of the Supreme Court of India. Chief Justice D.Y. Chandrachud, Justice Sanjiv Khanna, B.R. Gavai,  J.B. Pardiwala and Manoj Misra have given this verdict. While they arrived at a unanimous decision, each judge may have had slightly different reasoning. They have cited several key reasons:

1. Violation of the Right to Information:

The anonymity provided by the scheme, where donors remain unknown, was deemed to violate the fundamental right to information enshrined in Article 19(1)(a) of the Indian Constitution. The court argued that voters have a right to know who is funding political parties to make informed decisions during elections.

2. Lack of Transparency:

The scheme’s opacity raised concerns about its potential to facilitate corruption and undue influence on policy decisions. Furthermore, the court felt that without transparency, it was impossible to track the source of funds and prevent unfair advantages for certain parties.

3. Unequal Treatment of Political Parties:

Critics argued that the scheme unfairly benefited larger parties with better access to funds, making it harder for smaller parties to compete. The court did not directly address this concern, but the emphasis on transparency could potentially level the playing field.

4. Constitutional Challenges:

The court also identified specific constitutional issues with the scheme. For example, they found the provision allowing unlimited corporate donations through bonds to be violative of free and fair elections. Additionally, the amendment permitting loss-making companies to donate was deemed arbitrary and discriminatory.

5. Potential for Misuse:

While the scheme aimed to reduce cash transactions in political funding, the court expressed concerns about the potential misuse of anonymous bonds for money laundering or illegal activities.

Overall, the Supreme Court’s decision to ban the Electoral Bond Scheme aimed to promote transparency, accountability, and fairness in Indian elections by ensuring more information about political funding is available to the public.

It’s important to note that the implications of this decision are still evolving, and there may be further developments in the future.