Introduction:
- Presented as a part of the Finance Act in 2018.
- Permits the purchase of electoral bonds by individuals making anonymous payments to political parties.
- Bonds with values ranging from ₹1,000 to ₹1 crore.
- Bonds are only available for purchase during specific times and have a 15-day validity period.
- Bonds can be purchased by donors online, by demand draft, or by check.
- Political parties can cash bonds at particular State Bank of India (SBI) branches using their verified accounts.
- The Indian government launched the Electoral Bonds Scheme in 2018 with the declared goals of increasing transparency and doing away with the use of dark money for political financing.
- Individuals and businesses may buy electoral bonds under the program from specific SBI locations.
- Political parties may utilize these bonds, which are bearer instruments like promissory notes, to encash money. The donor doesn’t reveal their identity.
Facts of the case:
- The Indian government unveiled the Electoral Bonds Scheme in 2018.
- The program facilitated the anonymous giving of funds to political parties by means of bearer bonds obtained from specific State Bank of India (SBI) branches.
- The bonds had a 15-day validity period and were offered in values ranging from ₹1,000 to ₹1 crore.
- The program made it possible for registered political parties with state or national recognition to receive anonymous funds.
- Electoral bonds could only be purchased by individuals or businesses, and contributions from outside the country were strictly forbidden.
- Like promissory notes, the bonds were bearer instruments that could be redeemed by approved political parties through specific State Bank of India (SBI) branches within 15 days of purchase.
Issues Raised:
- Whether the Electoral Bonds Scheme’s anonymity guarantee makes it difficult to track down the sources of political funding, hence posing concerns about potential corruption and improper influence.
- Whether there are concerns about how large corporations will be able to influence elections and public policy if the plan allows corporations to make unlimited donations without having to declare their contributions.
- Whether the donors’ anonymity under the plan jeopardizes the public’s right to know where political funding originates.
- Whether, as many opposed to the plan argue, the opaque nature of the scheme threatens the essential principles of free and fair elections by giving wealthy donors undue power.
- Whether the lack of openness in the scheme has the potential to breed corruption and compromise the validity of the voting process.
- Whether the scheme’s lack of transparency undermines the principles of a level playing field and equal opportunity in the electoral process.
Contentions:
Arguments in favour:
- Prevents political parties from harassing donors and preserves their privacy.
- Encourages the donating of money to political causes.
- Decreases the amount of black money used to finance politics.
Arguments against:
- Inadequate accountability and openness.
- Enhances the impact of corporate contributions.
- Tramples on the freedom to information.
- Threatens impartial and free elections.
- The Electoral Bonds Scheme’s supporters contend that it safeguards donors’ privacy from political parties who could otherwise take revenge if their identities are revealed. Additionally, they contend that the program encourages more people to contribute to political causes, which can bolster democracy.
- By offering a legitimate avenue for donations, supporters assert that the program lessens the use of dark money in political finance. But detractors contend that
- Political parties benefit from the scheme’s anonymity feature, which also makes it difficult to identify the donors.
Additionally, they contend that the program offers corporate donors, who can now give indefinitely without revealing their identities, unfair power.
Important Provisions
- Donor Anonymity: This is the main component of the program that protects the privacy of the donor’s identity when they buy an electoral bond.
- Limited Political Party Transparency: Parties were only obliged to disclose the total amount they received in electoral bonds; they were not compelled to disclose the source of individual contributions. This reduced the financial reports’ openness.
- Branches Designated by the Government: Only particular State Bank of India (SBI) branches were authorized to sell electoral bonds.
- Purchase Window: Only certain periods, usually ten days at the start of each quarter, were open for the purchase of bonds. This put a time limit on bond acquisition.
- Denomination Range: There were bonds offered in a range of denominations from ₹1,000 (about US$12.30) to ₹1 crore (around US$1.23 million).
- The goal of this expanded selection was to serve a wider range of donors, including both people and businesses.
- Encashment Period: Political parties were given a specific amount of time, usually fifteen days, at specific SBI branches to cash their electoral bonds. This made it impossible for parties to cling to the relationships forever.
- Reporting Conditions: Political parties were required to notify the authorities of any questionable activity or transactions surpassing a certain level, even though donor identities remained anonymous.
- Know Your Customer (KYC) Checks: Although donor identities were kept a secret, the program may have required the SBI to conduct basic KYC checks when buying bonds in order to stop money laundering and other illicit activity.
- Government Oversight: The plan may have assigned the Election Commission of India (ECI) the responsibility of overseeing the overall
Supreme Court’s Decision:
- The Indian Supreme Court declared the Electoral Bonds Scheme illegal in May 2023.
- The plan, the court decided, went against both the principles of free and fair elections as well as the right to knowledge.
- The court ruled that political donation anonymity was not a basic right.
- The Indian Supreme Court declared the Electoral Bonds Scheme illegal in a historic ruling in May 2023. The court
Relevance In the field of Law:
Establishes precedence for Campaign Finance Regulations: The ruling rendered by the Supreme Court in this particular instance establishes a noteworthy precedent for any other legal disputes over the campaign finance laws in India. It raises the standard for accountability and transparency in political fundraising.
Resolves Donor Privacy Concerns with Public Access to Information: The case brings up important issues regarding striking a balance between the public’s right to know where political funding originates from and the privacy rights of donors. It is possible that this argument will come up again in conversations about policy and law.
Influence on Upcoming Laws: The ruling is probably going to have an impact on future laws in India that deal with political fundraising. When creating new regulations, legislators will have to take the court’s emphasis on accountability and openness into account.
International Law Implications: This case may have wider ramifications for international law, especially for nations dealing with comparable problems of campaign financing disclosure. Legal arguments in other jurisdictions could reference the reasoning of the Supreme Court.
Possibility of Wider legislative Reform: This historic case may pave the way for more extensive legislative changes in India that address political responsibility and transparency. It could serve as motivation for legal challenges to other parts of the democratic system that don’t provide enough transparency.
Conclusion:
The momentous ruling by the Supreme Court declaring the Electoral Bonds Scheme unlawful has far-reaching implications. It highlights how crucial accountability and openness in political donations are to maintaining the credibility of the democratic process. The lack of transparency in the plan made it easier for affluent donors to exert excessive influence and encouraged corruption, which weakened public confidence in the democratic system. The ruling has spurred an important discussion about the influence of money in politics and the requirement for more stringent laws to guarantee fair play for all stakeholders. Although there remains uncertainty regarding the future of campaign finance restrictions in India, the ruling by the Supreme Court establishes a solid precedent for increased accountability and transparency in political fundraising. Additionally, the case raises more general concerns on how a democratic society can combine donor privacy rights with the public’s right to know. This will probably be a subject of continuing discussion and even legal challenges in the future. For those who support free and fair elections and lessen the role of money in politics, the ruling is a win.
Aishwarya Mudgadkar
MP Law College, Aurangabad