Supreme Court Strikes Down Electoral Bonds Scheme: A Win for Transparency in Political Funding
- ByAdmin --
- 17 Jun 2025 --
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A five-judge Constitution Bench of the Supreme Court of India unanimously struck down the Electoral Bonds Scheme (EBS) and related amendments as unconstitutional. The court ruled that anonymous donations to political parties through this scheme violate the right to information of citizens and undermine democratic transparency.
Background
Introduced in 2018 by the Union Government, the Electoral Bonds Scheme allowed individuals, companies, and entities to purchase electoral bonds from the State Bank of India (SBI) and donate them to political parties anonymously. The scheme was presented as a tool to reduce the flow of black money in elections, but it quickly drew criticism for enabling opaque funding and removing public scrutiny.
To implement the scheme, the Finance Act, 2017 amended multiple laws:
- Representation of the People Act, 1951 (Section 29C) – Removed the requirement to disclose donations received through electoral bonds.
- Companies Act, 2013 – Removed the cap on corporate donations and eliminated the requirement to disclose the names of political parties receiving donations.
- Income Tax Act, 1961 (Section 13A) – Exempted political parties from maintaining records of donations through bonds.
- Reserve Bank of India Act, 1934 – Authorized SBI to issue electoral bonds.
Legal Issues Raised
The petitions, filed by organizations such as the Association for Democratic Reforms (ADR) and others, challenged the scheme on constitutional grounds:
- Whether the anonymity of political donations violates the right to information under Article 19(1)(a).
- Whether unlimited corporate donations breach the principle of equality under Article 14.
- Whether such a scheme disproportionately benefits ruling parties, leading to an uneven electoral playing field.
Supreme Court’s Judgment
The Supreme Court held that:
- The Electoral Bonds Scheme is violative of Article 19(1)(a), as it deprives citizens of their right to know the source of political funding, a right crucial to informed voting.
- The amendments to the Companies Act were struck down for allowing unlimited corporate funding without disclosure, which violates Article 14 and undermines democratic equality.
- The Court emphasized that transparency is a fundamental principle of electoral democracy, and anonymity in political funding leads to quid pro quo arrangements and corruption.
Immediate Directions by the Court
- State Bank of India was directed to immediately stop issuing electoral bonds.
- SBI must disclose details of all electoral bond purchases and redemptions since April 12, 2019, including donor and recipient information.
- These details are to be submitted to the Election Commission of India (ECI) and made public by March 13, 2024.
Significance of the Judgment
- The verdict reinforces the principle that voters have a right to know the funding sources of political parties before casting their vote.
- It sends a strong message that transparency and accountability cannot be sacrificed in the name of convenience or reform.
- The ruling realigns Indian electoral law with constitutional values of openness, fairness, and political equality.
Criticisms and Government's Stand
The government defended the scheme by arguing that it:
- Curbed the use of cash in political donations.
- Protected donors from political victimization.
- Brought in a formal banking trail through SBI.
However, the Court observed that such anonymity does not outweigh the voters’ right to information. It also criticized the imbalance in political funding, as data showed that a disproportionate share of bonds went to the ruling party, raising concerns about political favoritism.
The Road Ahead
With the Electoral Bonds Scheme now scrapped:
- The Parliament may need to introduce a new mechanism for transparent political funding.
- Experts suggest alternatives like state funding of elections, mandatory digital disclosures, and public funding caps.
- Civil society and legal reform advocates are expected to push for more comprehensive electoral finance reforms.
Conclusion
The Supreme Court’s decision to strike down the Electoral Bonds Scheme is a pivotal moment in India’s democratic journey. It underscores the Court’s commitment to uphold constitutional morality, electoral transparency, and the right of citizens to participate in an informed democracy. While it marks an end to anonymous donations, it opens the door for more meaningful and accountable reforms in India’s political funding landscape.
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