The Bond Breakdown

The Electoral Bond Scheme has sparked intense debate over political funding in the country, raising questions about its legality and broader democratic implications
By Geeta Singh

THE Electoral Bond Scheme has sparked intense debate over political funding in India, raising questions about its legality and broader democratic implications. A unanimous bench of five judges, led by Chief Justice of India D.Y. Chandrachud, struck down the scheme, deeming it unconstitutional. The Supreme Court affirmed that voters have the right to know the sources of political party funding, a cornerstone of democratic freedom of speech and expression. Following the court’s directive, the State Bank of India (SBI) was ordered to cease issuing electoral bonds and to disclose transaction details within three weeks. 

Facing challenges in data sharing, SBI requested a three-month extension just two days before the deadline, potentially postponing disclosure until after the Lok Sabha elections. Ultimately, under the Supreme Court’s stern directives, both the State Bank and the Election Commission disclosed the details, revealing significant contributions from companies and individuals through electoral bonds. 

An analysis of donation figures reveals a discernible pattern: companies involved in mining, road construction, and other public construction sectors, as well as those in basic infrastructure development, are the primary contributors to this funding. The timing is particularly noteworthy, as some of the largest purchasers of electoral bonds are companies that have been subject to actions by agencies such as the Enforcement Directorate (ED) and the Income Tax Department. Notable examples include Future Gaming, Vedanta Limited, and Megha Engineering. This correlation raises concerns about the underlying motivations for these bond purchases and their potential impact on the electoral process.

Introduced on January 29, 2018, electoral bonds serve as anonymous financial instruments that enable Indian citizens and companies to contribute to political parties. These bonds, issued in denominations ranging from ₹1,000 to ₹1 crore, are valid for 15 days. They can be used to make donations to political parties that have secured at least one percent of the votes in the last general elections, as stipulated by the Representation of People Act.

The electoral bond scheme has faced legal challenges, with two significant petitions filed in the Supreme Court. The Association for Democratic Reforms (ADR) and the non-profit organisation Common Cause jointly filed the first petition in 2017, while the Communist Party of India (Marxist) submitted the second petition in 2018.

The petitions submitted to the Supreme Court contend that the electoral bond scheme opens avenues for unlimited political contributions from both Indian and foreign companies, as well as enabling anonymous funding of political parties. This, in turn, is seen as legitimising widespread electoral corruption on a significant scale. Additionally, the petitions argue that the anonymity afforded by the electoral bond scheme violates citizens’ ‘right to know’, a fundamental aspect of freedom of expression under Article 19(1)(a) of the Constitution. Petitioners argue that FCRA and Companies Act amendments increase political funding opacity, potentially allowing foreign influence in Indian politics and leading to undisclosed corporate donations. Critics argue that this lack of transparency will heighten opacity in political funding and incentivize political parties to provide undue advantages to such companies.

The ADR report shows a sharp rise in political parties’ reserves over 11 years, with BJP’s assets growing by 627% to ₹894 crores by 2015-16, making it the wealthiest party. Congress and BSP also saw significant increases in their reserves during this period.

The termination of the Electoral Bond Scheme by the Supreme Court compels the government to critically evaluate its impact and seek new campaign funding avenues that ensure transparency and accountability for major donors. The necessity for transparency in donor-party relationships is underscored, emphasising the voters’ right to be informed about the financial contributions to political parties. As the country grapples with these issues, the resolution of the electoral bonds controversy is likely to have far-reaching consequences for the future of political funding and transparency.

Geeta Singh

Geeta Singh has spent 20 years covering cinema, music, and society giving new dimensions to feature writing. She has to her credit the editorship of a film magazine. She is also engaged in exploring the socio-economic diversity of Indian politics. She is the co-founder of Parliamentarian.

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