Electoral Bonds & Issues

Electoral Bonds emerged as a means of funding for political parties in India starting from 2017 until they were deemed unconstitutional by the Supreme Court on February 15, 2024. This decision followed a directive by a five-judge bench, led by Chief Justice DY Chandrachud, instructing the State Bank of India to disclose donor and recipient details to the Election Commission of India, which were subsequently made public.

Introduced in The Finance Bill, 2017 during the Union Budget 2017-18 by then Finance Minister Arun Jaitley, Electoral Bonds bypassed certain parliamentary scrutiny processes, drawing allegations of constitutional violation. Despite being proposed in early 2017, the Electoral Bond Scheme 2018 was officially notified by the Department of Economic Affairs in the Ministry Of Finance on January 2, 2018. Subsequently, a significant volume of electoral bonds, valued at ₹9,857 crore, were transacted between March 2018 and April 2022.

Amendments to the Electoral Bond scheme in November 2022 extended the sale period to 85 days in a year with scheduled assembly elections. However, opposition parties, including the Congress and the Communist Party of India (Marxist), voiced strong objections to the scheme.

The Supreme Court’s verdict in February 2024 invalidated the Electoral Bond scheme, citing violations of the Right to Information (RTI) and voters’ rights to political funding information under Article 19(1)(a) of the Constitution. The court also highlighted concerns regarding potential quid pro quo arrangements between corporations and politicians.

Features of Electoral Bonds included their function as interest-free banking instruments, accessible to Indian citizens or registered organizations following KYC norms. Bonds could be purchased through cheques or digital payments in specific denominations from designated SBI branches, with redemption within 15 days to legally registered political parties securing at least 1% of the votes in the last election.

The scheme’s anonymity feature, devoid of donor and recipient identification, raised concerns about transparency. Unredeemed bonds beyond the stipulated deadline would result in funds being directed to the Prime Minister’s Relief Fund.

The objective behind Electoral Bonds was to enforce transparent political funding by routing donations exceeding ₹2,000 through the banking system, thereby enhancing traceability and preventing the creation of illegal funds. Investigations revealed illicit diversion of public funds into the political domain, prompting measures to curb “black money” in electoral processes.

In conclusion, the Electoral Bond scheme, once hailed as a reformative step, faced legal scrutiny and eventual rejection by the Supreme Court, underlining the critical need for transparent and accountable political funding mechanisms.

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