Supreme Court Strikes down Electoral Bond Scheme: Upholding Transparency in Political funding

Introduction 

In a landmark judgment delivered on February 15, the Supreme Court of India made a significant ruling regarding the electoral bond scheme, declaring it unconstitutional. The five-judge Constitution Bench unanimously struck down the scheme, emphasizing its violation of the right to information enshrined under Article 19(1)(a) of the Constitution.

Before decoding the judgement of sects understand the electoral bonds

Electoral bonds are money instruments like promissory notes, which can be bought by companies and individuals in India from the State Bank of India (SBI) and donated to a political party, which can then encash these bonds.

The bonds are only redeemable in the designated account of a registered political party.

Before 2018 the donation were received through cash to make the system more transparent and accountable government come up with the scheme of electoral bond in 2018.

The government had described the scheme as an “electoral reform” in a country moving towards a “cashless-digital economy”.

(Source: Drishti IAS)

But According to the data

The highest donations from Electoral Bonds, totaling Rs.3,438.8237 crore, were received in 2019-20, the year of the general elections.

The party in power secured the highest donation among national political parties. More than 52% of the ruling party’s total donations were sourced from Electoral Bonds, amounting to Rs 5,271.9751 crore.

(source:  The Hindu)

Apart from these 

Initially, Section 29C of the Representation of the People Act, 1951, required parties to declare all contributions higher than ₹20,000, and specify whether they were received from individual persons or companies.

However, the Finance Act, 2017, amended this provision to create an exception wherein such a requirement would not apply to donations received through electoral bonds.

The electoral bond scheme, which allowed for anonymous political donations, came under scrutiny as the court underscored its infringement upon fundamental rights. By permitting anonymity in political contributions, the scheme obstructed the vital flow of information necessary for a thriving democracy. The court's ruling reiterated that the right to information is not solely about enabling freedom of speech and expression but is also integral to fostering participatory democracy and ensuring governmental accountability. Transparency in political funding is not merely a means to an end; it is an essential end in itself.

One of the key concerns addressed by the court was the correlation between economic inequality and political engagement. It acknowledged the inherent risk of quid pro quo arrangements resulting from financial contributions to political parties. The opacity afforded by anonymous donations exacerbates this risk, potentially undermining the democratic process.

The argument put forth by the Centre regarding the anonymity of donors was refuted by the Chief Justice. He highlighted the distinction between de jure anonymity, as expressed by the scheme, and de facto anonymity, pointing out loopholes that enable political parties to discern the sources of their contributions.

Conclusion

The ruling by the Supreme Court marks a significant step towards ensuring transparency and accountability in political funding. By striking down the electoral bond scheme, the court upholds the principles of democracy and reinforces the right of voters to be informed about the financial backing of political parties.

Moving forward, this decision sets a precedent for greater scrutiny and regulation of political financing, safeguarding the integrity of the electoral process and bolstering public trust in democratic institutions.

References

1. https://www.drishtiias.com/daily-updates/daily-news-editorials/sc-strikes-down-electoral-bonds-scheme-1#:~:text=Electoral%20bonds%20are%20money%20instruments,of%20a%20registered%20political%20party.
2. https://www.thehindu.com/
3. https://pib.gov.in/indexm.aspx