SC Strikes Down Electoral Bonds Scheme as Unconstitutional: A Closer Look
- ByAdmin --
- 25 Jun 2025 --
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In a landmark ruling, the Supreme Court of India declared the Electoral Bonds scheme unconstitutional, marking a pivotal moment in the debate on political financing and electoral transparency. Introduced as a measure to reform political funding, the scheme had been controversial since its inception, with critics arguing it fostered opacity rather than curbing black money. Let’s break down the judgment, its reasoning, and what it means for Indian democracy.
What is the Electoral Bonds Scheme?
The Electoral Bonds scheme was introduced in 2017 through the Finance Act. It allowed individuals, companies, and organizations to make donations to political parties anonymously. Here’s how it worked:
- Issuer: Only specific branches of the State Bank of India (SBI) could issue these bonds.
- Validity: The bonds had a 15-day validity from the date of issue.
- Eligibility: Political parties registered under the Representation of the People Act, 1951, and securing at least 1% of votes in the last general election, were eligible to receive these funds.
- Anonymity: Donors’ identities were not disclosed publicly.
While the scheme aimed to reduce unaccounted money in elections, its emphasis on anonymity raised red flags about transparency.
Why Did the Supreme Court Strike it Down?
The court’s decision hinged on three major concerns: transparency, accountability, and fairness in electoral processes.
1. Transparency and the Right to Know
The court emphasized that transparency is fundamental to democracy. Citizens have the right to know who funds political parties under Article 19(1)(a) of the Constitution, which guarantees freedom of speech and expression. This right enables voters to make informed choices.
2. Contradictions with Existing Laws
The Representation of the People Act, 1951, requires political parties to disclose donations exceeding ₹20,000. By allowing anonymity, the scheme undermined this mandate, creating a loophole for undisclosed, potentially unlimited corporate and foreign funding.
3. Threat to Democratic Accountability
The anonymity provision was seen as a threat to democratic accountability, opening doors for quid pro quo arrangements between donors and political parties. This could lead to undue influence on governance and policymaking.
What Did the Court Say?
In its judgment, the Supreme Court underlined several critical points:
- Opaque Financing: The court criticized the scheme for perpetuating opacity, which can distort the democratic process.
- Corporate Influence: Removing caps on corporate donations and allowing anonymity increased the risk of policy capture by powerful entities.
- Public Interest: The judgment reinforced that elections must prioritize transparency and fairness over donor anonymity.
Legal Provisions Cited
- Article 19(1)(a): Guarantees the right to freedom of speech and expression, including the right to information.
- Representation of the People Act, 1951: Mandates transparency in political party funding.
- Companies Act, 2013: Amendments in 2017 removed limits on corporate donations, raising concerns about unchecked political funding.
Implications of the Verdict
For Political Parties
Parties will now face greater scrutiny and must disclose the sources of their funding, ensuring accountability.
For Voters
The decision empowers voters by providing them with critical information about who is financially backing political campaigns, enabling more informed decisions.
For Electoral Reforms
This verdict sets a strong precedent for reforms aimed at ensuring transparency and curbing undue influence in elections.
The Way Forward
Critics of the judgment argue that removing anonymity may deter donors, particularly those who fear political retaliation. To address this concern, policymakers could explore alternatives, such as:
- State Funding of Elections: Public funding mechanisms could ensure a level playing field for all political parties while maintaining transparency.
- Strengthened Disclosure Norms: Mandatory real-time disclosure of donations can build trust without compromising donor privacy.
Conclusion
The Supreme Court’s verdict striking down the Electoral Bonds scheme is a significant step toward ensuring transparency and accountability in India’s electoral system. It reaffirms the principle that democracy thrives on informed citizenry and fair elections. As India navigates this pivotal moment, the onus is now on policymakers and civil society to work together to create a political funding framework that upholds democratic ideals while addressing legitimate concerns.
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