February 23, 2024


Will the SC’s electoral bonds verdict make any difference?

Money in politics is a tale as old as time. Every country grapples with the influx of money in electoral politics and how best to fund their elections. Campaign finance legislation is a tricky issue. India is no exception. In the absence of 100% publically-funded elections, we had electoral bonds.

Had is the operative word here. The Supreme Court recently struck down electoral bonds, calling them unconstitutional and violating the right to information. The verdict was met with almost universal praise – for transparency and democracy. However, while it’s good that electoral bonds are no more, does it solve the issue of dark money in politics? Does it make a concrete difference?


Electoral bonds were introduced in 2018 when the government notified the scheme to cleanse the system of dubious political funding. The goal was twofold – to reduce the amount and influence of black money in politics and provide a legal and transparent system for individuals and entities to contribute money to political parties of their choice.

These bonds were bearer instruments. That means there’s no information on ownership, and the document’s holder is assumed to be the owner. The bonds themselves were interest-free banking instruments eligible to a citizen of India or entity incorporated in India. They were available in multiple denominations, ranging from ₹1,000 to ₹1 crore at specified branches of the State Bank of India (SBI).

In 2017, then Reserve Bank of India (RBI) Governor Urjit Patel was sceptical about the prospect of electoral bonds. His big worry was they could be misused through shell companies. His suggestion was to make them digital instead of physical.

As far as the actual money is concerned, it was a lot. Between 2018 and 2022, electoral bonds worth over ₹9,000 crore were sold. Some reports stated that the BJP got about 58% of that amount. Data from the Election Commission (EC) showed that the BJP, Congress, Trinamool Congress (TMC), and the Nationalist Congress Party (NCP) got 55.09% of their total income through electoral bonds in 2021-22.

Right when electoral bonds were first mooted in 2017, the legal challenge came from the Association of Democratic Reforms (ADR). In 2019, through an interim direction, the Supreme Court asked all political parties that have received donations through the bonds to provide those details to the EC. Despite ADR’s insistence and appeals, the court refused to stay the scheme ahead of state elections in 2021.

Throughout several legal proceedings over the years, the Centre defended the electoral bonds scheme, calling it a “completely transparent system.” Now, the court decided to act and struck down the scheme. In calling it unconstitutional, the court also struck down amendments to the Income Tax Act and Representation of People Act, which exempted parties from reporting donations via bonds in their reports to the EC.

The court was clear in its judgment – the electoral bond system allowed for the unrestrained influence of companies in the electoral process. It viewed a company’s power to influence elections through money as higher than an individual’s.

While the judgment was met with near-unanimous praise, it begs the question – will anything change? Will the electoral funding become more transparent?

VIEW: A first step toward change

Transparency is the main point we need to concentrate on concerning this verdict. It upheld democracy’s core principle – a citizen’s right to know who’s giving how much money to political parties and their campaigns. The verdict made the right connection between anonymous corporate donations and the possibility of enacting policies to suit donors. The government’s insistence that electoral bonds increased and improved transparency hasn’t been borne out.

Indian elections are an expensive affair. They’re often wholly funded by corporations. There’s potential for a dangerous nexus between politics and the corporate world. Electoral bonds work to cement this nexus. This overwhelmingly favoured the BJP. Given the amount they got compared to others, the bonds never created a level playing field. The government’s willingness to use enforcement agencies against rivals further skewed things in their favour.

The bonds were cleverly complimentary to some of the government’s policies, like giving big companies hefty tax breaks. Their profitability grew exponentially, and they could buy more bonds. Another issue to note is the flip side – are we sure loss-making companies didn’t buy electoral bonds? It was a pertinent question asked by the Chief Justice. While some lingering questions remain, they’ll be answered once the donor list is revealed. But until then, the verdict is worth celebrating.

COUNTERVIEW: Not going to do a whole lot

There’s definitely reason to celebrate the court’s verdict on striking down electoral bonds. However, this isn’t the end of the story. The court equating the privacy rights of donors with individuals is faulty. It leaves the door open for future iterations of such types of donations. Electoral bonds aren’t just bought by companies; an individual can also buy. There needs to be a clear distinction between an individual, who can vote, and a company, which can’t.

While electoral bonds might be gone, the campaign finance laws as they were before 2017-18 remain. Contributions below ₹20,000 don’t have to be accounted for by parties, and companies are subject to a 7.5% limit on their profits. By reinstating spending caps on corporate donations, there’s likely going to be a resurgence of smaller undisclosed contributions. This negates any modest advancements in promoting formal banking channels for political donations.

Throwing out electoral bonds doesn’t solve or cleanse campaign finance issues. In fact, cash is still dominant in Indian politics. Electoral bonds accounted for just 10% of the total amount spent (₹1.2 lakh crore) by parties and candidates in one election cycle. Who’s to say this amount won’t just take the form of cash since bonds are now gone? That means quid pro quo possibilities don’t go away. Black money isn’t going away anytime soon either.

Reference Links:

  • What were India’s electoral bonds and how did they power Modi’s party? – Reuters
  • By March 13, Indians may know who funded which political party in the past six years – India Today
  • The SC’s Electoral Bonds Judgement Affirms the Primacy of the Vote Over the Note – The Wire
  • ‘Quid-Pro-Quo’: How Revealing Electoral Bonds Will Clear Questions of ‘Len-Den’ – The Wire
  • Electoral Bonds-Beyond The Supreme Court’s Brake, A Few Questions – NDTV
  • Flaw in Supreme Court’s electoral bonds verdict leaves room for another similar scheme to be floated – Scroll
  • Electoral Bonds Ban Will Do Little When Cash Is King – NDTV

What is your opinion on this?
(Only subscribers can participate in polls)

a) The SC’s verdict on electoral bonds will make a difference.

b) The SC’s verdict on electoral bonds won’t make a difference.


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