The Electoral Bonds Scheme of 2017 was introduced by the Indian government with the aim of reforming political funding and promoting transparency in the electoral process. However, the scheme soon became a subject of controversy, with critics raising concerns about its impact on transparency, accountability, and the overall democratic process. This led to a watershed moment in Indian politics, where, on 15th February 2024, the Supreme Court deemed Electoral Bonds unconstitutional. In this article, we will delve into the details of the Electoral Bonds Scheme, examining its objectives, mechanisms, and the broader implications it has had on Indian politics.
What are Electoral Bonds
The Electoral Bonds Scheme of 2017 was a landmark initiative by the Government of India aimed at reforming the process of political funding in the country. Under this scheme, individuals and entities, including corporations and associations, could purchase electoral bonds from specified branches of the State Bank of India (SBI) using their KYC (Know Your Customer) documents. These bonds could then be donated to registered political parties, which could encash them through designated bank accounts.
One of the key features of the scheme was the anonymity it provided to donors. When purchasing electoral bonds, the identity of the donor was not disclosed to the recipient political party or made public. This was intended to protect donors from potential backlash or reprisals for their political contributions.
The electoral bonds were issued in multiple denominations ranging from Rs. 1,000 to Rs. 1 crore, and were available for purchase for a limited period during specified months of the year. The bonds had a validity period of 15 days, within which they had to be donated to a registered political party. If the bonds were not donated within this period, they would be considered invalid and the amount would be transferred to the Prime Minister's Relief Fund.
Only political parties that had secured at least 1% of the votes polled in the previous general election or state legislative assembly election were eligible to receive donations through electoral bonds. The political parties were required to encash the bonds within 15 days of receiving them, failing which the amount would be transferred to the Prime Minister's Relief Fund.
Negative Implications
Foremost among the concerns leveled against the scheme is the profound lack of transparency it introduces into the political funding landscape. By permitting donors to remain anonymous, political parties are absolved from disclosing the identities of their contributors. This opacity poses a formidable challenge for the public and regulatory bodies in their efforts to monitor and scrutinize political funding. The resultant lack of transparency has raised serious concerns about the potential for misuse and corruption within the political arena.
Furthermore, the anonymity of donations through electoral bonds raises the specter of potential misuse for channeling black money into political parties. Black money, which comprises funds acquired through illegal means or not declared for tax purposes, poses a grave threat to the political process and undermines the integrity of elections. The absence of a transparent financial trail makes it exceedingly difficult to trace the origins of donations and verify their legitimacy, thus increasing the susceptibility to corruption within the political system.
Beyond the specter of corruption, the Electoral Bonds Scheme has also been lambasted for its perceived undermining of political opposition. The absence of a cap on corporate donations, coupled with the allowance for unlimited contributions, has fueled concerns that smaller parties or those lacking access to corporate funding may find themselves at a distinct disadvantage. This imbalance could potentially lead to a scenario where the interests of a select few powerful corporations are prioritized over the welfare of the general populace, thereby subverting the foundational principle of a level playing field in elections.
Moreover, the scheme's anonymity has been identified as a potent enabler of crony capitalism. Instances have surfaced where corporations have made substantial donations to political parties through electoral bonds and subsequently received preferential treatment or favorable policy decisions from the government. This cozy nexus between corporations and political entities can result in the primacy of corporate interests over public welfare, further eroding trust in the democratic process.
The influence of undisclosed donations on political parties also carries significant implications for public policy. Policies may be swayed to accommodate the interests of donors rather than serving the broader public good, leading to decisions that prioritize narrow interests over the collective welfare. This could have a deleterious impact on critical issues such as environmental conservation, consumer rights, and social welfare.
Furthermore, the lack of transparency in political funding poses a threat to media independence. Media organizations reliant on advertising revenue from political parties may be disinclined to report critically on these parties, fearing reprisals that could jeopardize their funding. This could compromise the media's role as a watchdog and undermine its capacity to hold political entities accountable.
Finally, the anonymity provided by the scheme raises concerns about potential threats to national security. Foreign entities could exploit this anonymity to inject funds into Indian politics, exerting influence over policy decisions that may not align with the country's best interests. This could have serious ramifications for India's sovereignty and national security.
Advantages of the scheme
One of the key advantages of the scheme is its ability to enhance the privacy and security of donors. By allowing donors to remain anonymous, the scheme provides a level of confidentiality that encourages individuals and organizations to contribute to political parties without fear of reprisal or undue scrutiny. This can lead to a more diverse and inclusive funding base for political parties, enabling them to operate more effectively and democratically.
Moreover, the scheme has the potential to promote corporate accountability and transparency. By requiring companies to make political donations through electoral bonds, the scheme ensures that these contributions are accounted for and disclosed to regulatory authorities. This can help prevent companies from engaging in underhanded or unethical practices to influence political decisions, thereby promoting a more ethical and responsible corporate culture.
Additionally, the scheme has been praised for its role in promoting financial inclusion and digitalization. By facilitating political donations through online platforms and bank transactions, the scheme encourages the use of digital payment methods and banking services, thereby promoting financial literacy and inclusion among the populace. This can have far-reaching benefits for the economy as a whole, by reducing the reliance on cash transactions and promoting a more transparent and accountable financial system.
Furthermore, the scheme has the potential to enhance political competition and diversity. By providing a secure and confidential means for individuals and organizations to support political parties, the scheme encourages new and smaller parties to enter the political arena. This can lead to a more vibrant and competitive political landscape, with a greater diversity of voices and ideas being represented in the political process.
Comparative analysis
The anonymity offered by the Electoral Bonds Scheme empowers individual donors, ensuring that their contributions remain confidential and shielded from potential reprisals or public scrutiny. This anonymity serves as a crucial safeguard for donors who may otherwise hesitate to support political parties due to fear of backlash or retaliation. By providing a secure and discreet avenue for donations, the scheme encourages a more diverse and inclusive funding base for political parties. This empowerment of individual donors is significant as it promotes greater political participation and engagement among citizens. When individuals feel confident that their contributions will not be disclosed, they are more likely to support political parties and causes that align with their values and beliefs. This can lead to a more vibrant and dynamic political landscape, with a broader range of voices and perspectives being represented. Moreover, the anonymity provided by the scheme can help counteract the influence of vested interests and powerful lobbies. When donors can contribute without their identities being revealed, they are less likely to seek favors or special treatment from political parties. This can lead to more independent and principled decision-making within political parties, enhancing the overall integrity of the political process. Additionally, the anonymity of donations through electoral bonds can help prevent the politicization of donors' identities. In a polarized political environment, donors may face social or professional repercussions for supporting certain parties or causes. The anonymity provided by the scheme ensures that donors can contribute without fear of being targeted or stigmatized based on their political affiliations.
Yet, the scheme lacks a stringent regulatory framework. For example, a corporation that donates a significant amount through electoral bonds might expect regulatory or policy decisions that benefit their business, even if these decisions are not in the best interest of the general public. This can lead to a distortion of policy priorities, with government actions being driven more by corporate interests than by the needs of the citizens. Furthermore, the anonymity provided by the scheme makes it difficult to track and monitor these interactions between corporations and political parties. Without transparency in political funding, there is a risk that decisions are being influenced by undisclosed donations, rather than by democratic principles or the public interest. This lack of transparency erodes trust in the democratic process and can undermine the legitimacy of government actions.
The verdict
The five-judge constitutional bench, led by Chief Justice of India DY Chandrachud, delivered a unanimous decision that struck down the scheme, deeming it unconstitutional.
At the heart of the verdict was the court's interpretation of the right to information under Article 19(1)(a) of the Constitution. Chief Justice Chandrachud, in delivering the judgment, emphasized that the right to information extends beyond state affairs to include information necessary for participatory democracy. The emphasis on the broader implications of the right to information underscored its pivotal role in safeguarding the democratic ethos of the nation. The court's deliberations illuminated how an informed citizenry serves as the bedrock of a vibrant democracy, and any impediments to access crucial information undermine the very essence of democratic governance. The anonymity feature of the Electoral Bonds Scheme was deemed antithetical to this ethos, as it obscured the origins of political contributions, thereby depriving citizens of essential insights into the financing of political parties.
The court's decision was also influenced by its assessment of the scheme's impact on the principle of free and fair elections. The bench expressed concerns about the potential for unlimited corporate funding to political parties to distort the electoral process and undermine the level playing field among political parties. It noted that while the privacy of donors is important, it cannot be used as a justification to curtail the public's right to know about the funding of political parties.
In its verdict, the court not only struck down the scheme but also quashed the amendments made to the Income Tax Act and the Representation of People Act that had made the donations anonymous. It directed the State Bank of India, the issuing bank for electoral bonds, to stop the issuance of bonds and instructed it to furnish details of donations and the political parties that received them to the Election Commission of India.
Moreover, the court's verdict highlighted the need for comprehensive reform of the political funding system in India. While striking down the Electoral Bonds Scheme, the court emphasized the importance of developing a transparent and accountable mechanism for political funding that would address the concerns raised by the scheme.
Conclusion
In conclusion, the Supreme Court's verdict on the Electoral Bonds Scheme of 2017 marked a significant milestone in India's legal and political history. This verdict is not just a legal ruling but a reaffirmation of the core values of democracy that form the foundation of India's governance system. It is now incumbent upon policymakers to heed this ruling and work towards enacting reforms that promote transparency, accountability, and fairness in political funding.