What are Electoral Bonds?

• Financial instruments similar to promissory notes.
• Purchased from the State Bank of India (SBI) by individuals or companies.
• Gifted or donated to political parties.
• Can only be cashed by political parties in designated accounts.
• Individuals can buy bonds singly or jointly.

Electoral Bonds Scheme

• Introduced in India in 2018 to reform political funding.
• Aims to enhance transparency in electoral funding.
• Government declared it as an electoral reform to align with a cashless-digital economy transition.

Reasons for Supreme Court’s Decision

• Violation of Right to Information
  • Scheme allowed anonymous political donations, infringing on Article 19(1)(a) of the Constitution.
  • Right to information crucial for transparency and accountability in democracy.
• Right to Donor Privacy Doesn’t Extend to Contributions
  • Large corporate contributions shouldn’t be shielded from scrutiny, considering potential policy influence.
• Rejection of Amendment to Section 29C of RPA, 1951
  • Restores transparency by reinstating requirement for parties to declare contributions exceeding ₹20,000 and specify sources.
• Not Proportionally Justified to Curb Black Money
  • Curbing black money doesn’t align with reasonable restrictions under Article 19(2) of the Constitution.
• Unlimited Corporate Donations Violate Free and Fair Elections
  • Amendment permitting unlimited political contributions by companies deemed arbitrary.

Suggestions for Electoral Funding in India

• Regulation of Donations
  • Ban foreign citizens or companies from making donations.
  • Impose donation limits to prevent control by large donors.
• Public Funding to Parties
  • Introduce democracy vouchers for voters to donate to preferred political parties.
• Balancing Transparency, Anonymity
  • Require disclosure of large donations for monitoring flow of money into politics.
• Disclosure Requirements
  • Protect donor anonymity to safeguard against retribution or extortion, especially in high-tension political contexts.

Conclusion

• Significant Milestone for Democracy
  • Supreme Court’s decision on February 15, 2024, marks a milestone for Indian democracy by striking the Electoral bonds scheme unconstitutional.
• Recognition of Right to Information
  • Key to the Court’s decision is its recognition of the scheme’s infringement on the right to information.
• Victory for Transparency and Accountability
  • Verdict upholds fundamental principles of transparency, accountability, and the rule of law in India’s democracy.