The Carnegie Endowment for International Peace calls it “legitimized opacity.” For journalists like Nitin Sethi, who spent months doing in-depth research on the topic for The Reporters Collective, it is nothing more or less than a fraud. In the end, in a unanimous verdict, a Constitution bench of the Supreme Court said the electoral bonds scheme (EBS), due to its anonymous nature, was violative of the Right to Information Act and affected free speech and expression under Article 19(1)(a) of the Constitution.
Graphic with caption:Graphic courtesy: Association of Democratic Reforms, one of the petitioners
According to the Supreme Court Observer, the case had four key issues: whether the electoral bond scheme is constitutional, whether it violates the voters’ right to information, whether it can allow anonymity with the view to protect donors’ right to privacy and finally, whether it threatens the democratic process, and free and fair elections.
Graphic with caption:Compilation and analysis courtesy Association of Democratic Reforms. The table shows the top party-wise donations from Electoral Bonds between FY 2017-18 and FY 2022-23. The data is sourced from the audit reports of political parties. FY 2023-24 data is not available in the public domain. For the full table: https://adrindia.org/sites/default/files/Party_wise_EBs_data_15-02-2024.pdf
The petitioners were the Association for Democratic Reforms, Common Cause and the Communist Party of India (Marxist), represented by Advocate Prashant Bhushan, Senior Advocate Kapil Sibal, Advocate Shadan Farasat, Advocate Nizam Pasha and Senior Advocate Vijay Hansaria.
Graphic with caption:Source: Venkatesh Nayak/CHRI, ADR
Brought in by the Modi government in 2017, the scheme immediately faced legal challenges within the same year; however, the Supreme Court took years to hear the case and had earlier refused to stay it. In total, including the latest data, Rs.16,518.11 crore electoral bonds (EBs) have been sold by the State Bank of India so far.
According to data cited in The Hindu, 54% of the BJP’s total income in 2022-23 came from EBs. Of Rs.12,008 crores worth of EBssold between 2017-2018 and 2022-2023, the BJP received nearly 55% or Rs.6,564 crore. Meanwhile, Congress received 9.5% of all EBs sold in the same period at Rs.1,135 crore, followed by the Trinamool Congress at Rs.1096 crore.
Even regional parties have benefited to some extent from EBs. The Bharat Rashtriya Samiti – BRS – was the largest recipient in 2022-23, with the TMC in second place, followed by the BJD and YSR Congress. However, all of them are paltry sums compared to the BJP’s income through EBs. CPI(M) general secretary Sitaram Yechury said this would “expose the murky deal makings of the ruling party”. CPI(M), one of the petitioners, has never accepted electoral bonds. Samajwadi Party president Akhilesh Yadav said it would pave the way for the revival of democracy, terming EBsas the BJP’s “corruption bond”. BJP received nearly 90% of all corporate donations in the financial year 2022-23. Delhi, Gujarat, and Maharashtra were the top contributors to national party donations, with Rs.276.202 crore, Rs.160.509 crore, and Rs.96.273 crore, respectively.
What the judgement says
- The Bench held that the Scheme violated the voters’ right to information as enshrined in Article 19(1)(a) of the Constitution.
- The Court also directed that the sale of EBs be stopped with immediate effect.
- SBI was directed to submit details of EBspurchased from 12 April 2019 till date, to the ECI.
- This will include details of the purchaser as well as the political parties the bonds were given to.
- Further, the Court ordered the ECI to publish the information shared by SBI on its official website within one week from the receipt of the information (by 13 March 2024).
- The court also raised concerns about how political parties may have asymmetric access to information of donors, thus making the objective of the Scheme contradictory and inconsistent.
How can SC order benefit voters
By centering transparency in political funding, the judgement directly challenges the Modi government’s so-called moral high ground on tackling corruption. The entire electoral bonds proposal was based on the framing that it would tackle black money and allow for greater transparency. But instead, it became a way for anonymous – and large value – investors to in practice, fund parties anonymously. During the hearing as well, The Union of India (UoI) defended this guarantee of anonymity to corporate donors on the ground that it would cut down on black money.
Additionally, with the bench extending the logic of right to information to political parties, there are major implications with the judgement making it clear that parties do not have a carte blanche in claiming exemption to accountability. According to the bench, these large-scalehigh-value donations (94% of the contributions have been made in the denomination of one crore) can effectively lead to a quid quo pro arrangement due to the close nexus between money and power.
The Court also said the electoral scheme would aid the political party that was in power. It also held that “Economic inequality leads to differing levels of political engagement. Access to info leads to influencing policy making and also leading to quid pro quo arrangements may also help a party by the party in power.”
The judgement has opened doors to at least tackling this aspect. Alarmingly, the Union of India argued that “Citizens do not have a general right to know regarding the funding of political parties. Right to know is not a general right available to citizens.” The judgement is a rejection of this kind of discourse; but concerns remain.
Future concerns
There are some new and alarming developments. According to a new report by Nitin Sethi, “Though the Supreme Court on February 15 held the Electoral Bonds scheme to be unconstitutional, the government has now set up a discreet route to collect data on the entire spectrum of political donations – from all individuals, corporates and other organisations. With this mechanism in place, the Union government, which until days ago advocated for keeping details of political donations hidden from citizens as well as all political parties, will now become the sole repository of granular data on all types of political donations.”
This will be done through a Central Board of Direct Taxes (CBDT) supervised by the Finance Ministry, which has introduced new forms for income tax returns, where individuals, corporate houses and other organisations must report details of all political donations in their annual tax returns. They are not required to mention the party they donated to, but must reveal how much they donated. This entire move runs contra to the very claims that the government had made when announcing EBs. Effectively, starting with the current financial year, the government will now have details of each of these transactions, disclosed mandatorily by the donor to the income tax authorities annually. In an atmosphere of intense political overreach, this allows the government to keep track of all donations, but this will not be accessible to the public at all, defeating purposes of transparency.
Additionally, a great deal of political corruption still occurs through black money; while this judgement cannot fully tackle that issue, it is a major blow to the disproportionate funding that makes it impossible for smaller parties – or even big parties in the Opposition – to have healthy competition in the elections. However, it remains to be seen whether the Union of India will find ways to challenge this, using review jurisdiction.