Electoral Bonds
Synopsis
The Supreme Court’s recent decision to ban anonymous electoral bonds in India marks a significant shift in the country’s political finance landscape. The Supreme Court of India has prohibited political parties from using anonymous electoral bonds as a means of fundraising. Funding is impacted by this choice regardless of political affiliation, but the ruling BJP, which gained the greatest from the program, is perceived as losing out.
The electoral bonds program was declared “unconstitutional” by the Supreme Court on Thursday, invalidating its legitimacy. Additionally, it decided that, by Article 19(1)(a), anonymous poll bonds violate the right to information. Poll bonds are a violation of fundamental rights, according to India’s Chief Justice DY Chandrachud, and there are other ways to combat illicit money.
State Bank of India Ceases Electoral Bond Sales:
State Bank of India, a state-run lender, has been ordered by the SC to cease offering electoral bonds for sale. Additionally, SBI has been requested to provide information about electoral bond donations as well as the political parties that received them. The Election Commission has been requested to post the details on its website by March 13, 2024, after the SC ordered SBI to furnish the information with it by March 6.
The Indian Supreme Court has decided that political parties are no longer able to raise money through electoral bonds, which are devices that allow for anonymous donations. These bonds enabled payments to be made to political parties via a banking channel by people or businesses, but they were not traded securities. The contentious aspect that sparked the legal dispute was the government’s choice to protect the contributors’ anonymity.
Chief Justice’s Ruling and Criticisms:
The court determined that political financial donations cannot be done anonymously and that electoral bonds are no longer an acceptable way to support political parties. The court ruled that voters are entitled to the information they need to cast their ballot. It is against that fundamental principle to grant anonymity to contributors who make significant contributions. Big business contributors may receive perks in exchange for their anonymous donations, such as improved access to lawmakers and advantageous policy choices.
The plan may hurt India’s electoral democracy by eliminating transparency rules. The court proceeded to decide that there should be an end to the complete non-disclosure of funds. The nation’s highest judge, D. Y. Chandrachud, issued the ruling on behalf of the five-judge bench, declaring that the plan is arbitrary, violates India’s constitutional values, and must be overturned.
The State Bank of India, a government-owned institution, issues electoral bonds as a means of facilitating political donations via the banking system. These notes are sold at least four times a year and come in denominations between 1,000 and 10 million rupees. By giving the bank the appropriate amount, a person or business could purchase these bonds in support of the political party they wish to give to. This method did not reveal the identity of the donor.
The bonds that were issued in each party’s favor might subsequently be cashed whenever needed. Theoretically, the issuing bank was the sole organization with access to all donor information. However, the plan was criticized since it was thought that since the government owned the bank, the ruling party might also have access to the information.
Anticipated Impact on Electoral Transparency:
It is anticipated that this important and timely ruling will increase the relative transparency of India’s elections. All parties must reveal the identities of contributors who make cash contributions above 20,000 rupees ($240.92). If the donation was made using electoral bonds, this necessary declaration was eliminated. As a result, this instrument started to receive a lot of contributions. It is anticipated—or at least hoped—that the fundraising process will become more transparent now that the court has ruled that it is illegal to withhold the identity of funding sources. The total amount of political finance is unrestricted and can still be used in other ways, to be sure.
The court’s decision affects finance in Indian politics regardless of political affiliation, but it is especially considered a setback for the ruling party. Following its introduction in 2018, the program quickly became the go-to way for large corporations to make anonymous contributions to political parties. The BJP benefited the most from the arrangement, receiving about 13 billion rupees in funding through electoral bonds in FY 2022–2023.
As to the audited annual financial reports presented to the country’s election commission, the opposition Indian National Congress, which is the major rival of the ruling party, received a sum of 1.7 billion rupees. The court’s ruling may not immediately affect the party’s financial position, but it is a criticism of a plan supported by the BJP and a setback to its anti-corruption reputation, which it has heavily emphasized in the last ten years to win the election.
Statistics on BJP and Congress Electoral Bond Receipts:
WHAT AMOUNT OF MONEY THE CONGRESS AND BJP GET FROM ELECTORAL BONDS?
The Bharatiya Janata Party received over Rs 1,300 crore through electoral bonds in FY23, according to statistics released by the news agency PTI.
61 percent of the total contributions collected by the BJP in the fiscal year 2022–2023 came from electoral bonds, as per the BJP’s annual audited report submitted to the Election Commission.
In FY23, the Congress received about Rs 171 crore, as opposed to Rs 236 crore in FY22.
Electoral bonds brought in Rs 3.2 crore for the Samajwadi Party in FY23, compared to zero in FY22. TDP received Rs 34 crore in FY23—a tenfold increase over FY22.