Supreme Court Strikes Down Electoral Bonds Scheme as Unconstitutional: A Blow to Anonymous Political Funding

In a significant verdict delivered recently, the Supreme Court of India declared the electoral bonds scheme as “unconstitutional.” This ruling marks a watershed moment in the country’s electoral landscape, with far-reaching implications for political funding and transparency.

Supreme Court of India

A unanimous decision by a five-judge Constitution bench, led by Chief Justice DY Chandrachud, held that the anonymous nature of the electoral bonds scheme violates the fundamental right to information enshrined in Article 19(1)(a) of the Indian Constitution. The verdict comes after a series of legal challenges to the central government’s scheme, which allowed for undisclosed funding to political parties.

The court emphasized the critical role of political parties in the electoral process and underscored the importance of transparency in funding for making informed electoral choices. Consequently, the Supreme Court directed the State Bank of India (SBI) to cease issuing any further electoral bonds, signaling an end to the controversial system.

The ruling is a setback for the Bharatiya Janata Party (BJP), which has been the primary beneficiary of the electoral bond scheme since its introduction in 2017. Additionally, the court mandated the SBI to furnish details of electoral bonds purchased from April 12, 2019, onwards to the Election Commission, further enhancing transparency in political funding.

Advocate Prashant Bhushan hailed the verdict as a significant step towards safeguarding electoral democracy, emphasizing that it upholds citizens’ right to information regarding political contributions. The court’s decision nullifies the provisions introduced in various laws, including the Income Tax Act and the Companies Act, pertaining to the implementation of the electoral bonds scheme.

Initially pitched as an alternative to cash donations, the electoral bonds scheme allowed individuals and entities incorporated in India to purchase bonds, which could then be donated to eligible political parties. However, only parties meeting specific criteria, such as securing at least 1% of votes in previous elections, were eligible to receive these bonds.

Despite initial legal challenges, the apex court had declined to stay the scheme in April 2019, opting instead to delve deeper into the issues raised by the Centre and the Election Commission. The Constitution bench, during hearings, stressed the need to reduce the reliance on cash in the electoral process, highlighting the broader implications for the sanctity of elections in the country.

The verdict represents a significant victory for transparency and accountability in political funding. It underscores the judiciary’s role in upholding democratic principles and ensuring that electoral processes remain fair and equitable. With the electoral bonds scheme now deemed unconstitutional, the focus shifts towards exploring alternative mechanisms that promote transparency and public trust in India’s democratic institutions.