The Supreme Court of India on February 15th called electoral bonds unconstitutional. Thereby, banned a mysterious source of funding for elections that has generated hundreds of millions of dollars in revenues for political parties.
The apex court announced its verdict on an ongoing petition calling for the bonds to be scrapped. The scheme has been under scrutiny, and the top court has in November said the bonds “put a premium on opacity” and can be “misused for money laundering”.
The court’s decision could profoundly shape the conduct of India’s upcoming general elections, scheduled between March and May, influencing the extent to which untraceable funds are involved and which entities possess the means to exert significant influence on the political arena.
What happened?
The system of electoral bonds was introduced in 2018 by the ruling government, under which bonds must be bought from the State Bank of India (SBI) but can be donated to parties anonymously. Underscored that the scheme violates the right to information (RTI) under Article 19(1)(a) of the constitution.
Along with this, the court struck down the amendments made to the Income Tax Act of 1961, and the Representation of the People Act of 1951, which enabled such anonymous political contributions.
Further, the court held that such schemes infringe upon the right to information guaranteed under Article 19(1)(a) of the Indian Constitution.
Additionally, the court also agreed with the contentions of the petitioners that since the purpose of curbing black money cannot be traced to any of the reasonable restrictions elucidated under Article 19(2), it cannot be considered a valid reason for impeding the fundamental right to information.
High engagement between money and politics
Adding on, it postulated upon the economic inequality that leads to differing levels of political engagement because of the high engagement between money and politics. Consequently, there is a legitimate possibility that financial contribution to a political party would lead to quid pro quo arrangements.
Chief Justice Chandrachud rejected the Centre’s contention that the anonymity of the bonds prevents political parties from knowing the identity of the donors.
Pointing out that such de jure anonymity of the contributors does not translate to de facto anonymity since there are significant gaps in the scheme to enable political parties to know the particulars of the contributions made to them.
The State Bank of India has been asked to furnish details of bonds purchased since April 12th, 2019 to date to the Election Commission of India. Subsequently, the Election Commission has instructed for this data to be published on its official website by March 13th.
Current situation
The Election Commission on March 14th published the information on the website as asked by the apex court of India.
Additionally, on March 18th, a 5-judge constitutional bench, headed by the Chief Justice of India (CJI), reconvened to address the issue of complete disclosure of electoral bond details by the State Bank of India (SBI). SBI has been instructed to reveal all pertinent information concerning electoral bonds, including the alphanumeric identifier associated with each bond.
It pronounced that “ There is no manner of doubt that SBI is required to make a complete disclosure of all details in its possession. This we clarify would comprehend the alphanumeric number and the serial number of any of the bonds which were purchased and redeemed.”
SBI has asked to file an affidavit on or before 5 pm on March 21st, affirming that the bank has disclosed all details of the bonds to the ECI.