Author: Kshiraj R, RV University, Bangalore
To the Point
In 2018, the Indian government introduced Electoral Bonds as a “revolutionary” way to fund political parties think Netflix gift cards, but for politicians, redeemable only by registered national or state parties. Proponents hailed it as a cleaner alternative to cash donations; critics warned it turned electoral financing into a secret handshake among the rich and powerful. This article examines whether Electoral Bonds truly enhance transparency, or merely cloak political funding in deeper shadows, potentially violating constitutional guarantees of free and fair elections under Article 324 and the fundamental right to information under Article 19(1)(a).
Use of Legal Jargon
Electoral Bonds raise thorny issues of state accountability, public trust doctrine, and secrecy versus disclosure. They implicate the doctrine of transparency, the right to know recognized under Article 19(1)(a), and the equal right to vote under Article 326. From a constitutional perspective, mandating anonymity for donor’s risks breaching the principle of reasonableness under Article 14, and clashes with the doctrine of proportionality in restricting citizens’ ability to know who influences electoral outcomes. Moreover, the electoral bond regime potentially conflicts with statutory disclosure requirements under the Representation of the People Act, 1951, further muddying the waters of lawful political finance.
The Proof
A close look at post-2018 political financing reveals a troubling shift, while banks maintain detailed records of who purchases Electoral Bonds, neither the public nor the Election Commission has access to this information. Instead, annual disclosures merely report aggregate figures of bonds sold and redeemed, omitting any party-wise donor identities. Consequently, large corporate or individual contributions once capped by mandatory disclosure thresholds can now flow anonymously into party coffers. Data from think-tanks shows that, since the introduction of Electoral Bonds, corporate donations to national parties surged by over 300 percent, even as small-donor contributions noticeably declined. This disparity suggests that anonymity has incentivized deep-pocketed funders to favour high-value, undisclosed donations, potentially skewing political influence in ways earlier reforms sought to prevent.
Abstract
Electoral Bonds were introduced to “clean up” political funding by channelling donations through banks and limiting cash contributions. However, by permitting complete donor anonymity, the scheme arguably weakens electoral transparency and accountability. This article analyses the constitutional and statutory framework governing political finance, evaluates key judicial pronouncements, and assesses whether Electoral Bonds strike an appropriate balance between privacy of donors and the electorate’s right to know. It concludes with proposals to reconcile transparency with legitimate donor privacy, ensuring robust democratic processes.
Case Laws
Association for Democratic Reforms v. Union of India, the Supreme Court held that voters have a right under Article 19(1)(a) to know the background of electoral candidates including their criminal records, assets, liabilities, and educational qualifications and empowered the Election Commission to issue interim disclosure directions in the absence of enabling legislation. By analogy, any scheme (like electoral bonds) that conceals political funding sources undermines informed voting and free choice.
Union of India v. Association for Democratic Reforms, the Court ruled that political parties qualify as “public authorities” under the Right to Information Act, 2005, and must therefore disclose their funding sources and donor details. This judgment directly conflicts with the Electoral Bond Scheme’s donor anonymity, reinforcing that political financing must be open to public scrutiny.
Association for Democratic Reforms & Ors. v. Union of India & Ors., on February 15, 2024, a five-judge Constitutional Bench unanimously struck down the 2018 Electoral Bond Scheme as violative of voters right to information under Article 19(1)(a). The Court declared that donor anonymity disproportionately restricts the electorate’s right to know who funds political parties, directed an immediate halt to bond issuance, and ordered SBI to furnish detailed records of all bonds sold since April 12, 2019 to the Election Commission for public disclosure.
Conclusion
Electoral Bonds, though sold through the banking system, effectively reverse the tide of transparency established by earlier reforms. By legally insulating donor identities, they risk undermining public confidence and skewing political influence toward deep pockets. Constitutional mandates enshrined in Articles 14, 19, 324, and the Representation of the People Act demand both fairness and openness in electoral processes. Reform must focus on mandating real-time, donor-wise disclosures above a modest threshold, while protecting genuine small-donor privacy. Only then can India strike the right balance between a donor’s legitimate confidentiality and the electorate’s paramount right to know.
FAQS
Q1. Why were Electoral Bonds introduced?
Electoral Bonds were introduced in 2018 with the declared goal of sanitizing political funding. The government claimed it was time to end the age of shady cash donations stuffed in brown envelopes and move to a cleaner, banking-based model. The bonds, purchasable from the State Bank of India, allowed individuals and corporations to donate to political parties through formal channels.
Q2. What is the main legal concern with Electoral Bonds?
The key legal issue was donor anonymity. While SBI recorded who purchased bonds, this information wasn’t shared with the public, other parties, or even the Election Commission. It created a scenario where the voters were asked to trust the process without knowing who was financially backing it. Constitutionally, this secrecy clashed with Article 19(1)(a), which guarantees the right to information, especially in matters as vital as political funding. After all, how can a democracy be transparent when the money behind it wears an invisibility cloak.
Q3. Are Electoral Bonds still valid?
Not anymore. In a landmark judgment delivered on February 15, 2024, the Supreme Court struck down the Electoral Bond Scheme as unconstitutional. The Court held that it violated the right to information under Article 19(1)(a) by depriving voters of knowledge about who was funding political parties. It also ordered the State Bank of India to stop issuing bonds and to submit detailed records of all transactions dating back to April 2019. The Election Commission was instructed to publish these details effectively turning the curtain of secrecy into a glass wall.
Q4. How were Electoral Bonds different from regular donations?
Before Electoral Bonds entered the scene, political donations over ₹20,000 had to be disclosed, and companies could donate only up to 7.5% of their average net profits over three years. But the bond scheme tore up the rulebook. It allowed unlimited, anonymous donations even from shell companies. It was as if someone said, “Let’s make political funding clean,” and then promptly dropped it into a black box. Regular donations had names, dates, and limits; electoral bonds had neither accountability nor traceability.
Q5. What reforms have been proposed after the judgment?
Several practical reforms have been floated in response to the Supreme Court’s decision. These include requiring disclosure of donor names for contributions above a modest threshold (such as ₹10,000), reinstating caps on corporate donations, and introducing real-time reporting of bond redemptions. Importantly, these proposals also suggest safeguarding the privacy of small, individual donors. The idea is to strike a balance, protect the common citizen’s voice while preventing the wealthy and powerful from writing policy with their cheque books.
