Explained: What Are Electoral Bonds And Why Supreme Court Struck It Down
In a landmark verdict that can have a major impact on political fundings in India, the Supreme Court on Thursday struck down the electoral bonds scheme, saying it violates the right to information and freedom of speech and expression under the Constitution.
Electoral bond was a scheme introduced by the Narendra Modi government in 2018, for political parties to receive donations.
What are Electoral Bonds
The then Finance Minister Arun Jaitley introduced the Electoral Bond scheme in The Finance Bill, 2017 as pitched as an alternative to cash donations made to political parties.
Electoral Bond was introduced with a promise to bring transparency in political funding and came into effect on January 2, 2018,
According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in the country. An individual can buy electoral bonds, either singly or jointly with other individuals.
How can Electoral Bonds be purchased?
Electoral bonds are similar to promissory notes and are issued by the State Bank of India (SBI).
It can be sold in multiples of Rs 1,000 all the way up to Rs 1 crore.
Anyone can purchase these electoral bonds by completing the KYC norms and making payments from a bank account.?
Benefits of Electoral Bonds
The electoral bonds would have a life of only 15 days during which it can be used for making donations to political parties, but it will not carry the name of the donor.
The donations made under this scheme by corporate and even foreign entities enjoyed 100% tax exemption while the identities of the donors are kept confidential - both by the bank as well as the recipient political parties.
Most donations through Electoral Bonds
Since its introduction, the BJP has been the biggest benefactor of electoral bonds.
The BJP received around Rs 1300 crore through electoral bonds in 2022-23, while the Congress received Rs 171 crore in donations.
Why SC struck down Electoral Bonds
The SC on Thursday struck it down saying that financial contribution to a political party could lead to quid pro quo arrangements and that anonymising such contributions infringe upon the right to information of the voter provided under Article 19(1)(a) of Constitution.
¡°There is also a legitimate possibility that financial contribution to a political party would lead to quid pro quo arrangements because of the closed nexus between money and politics. Quid pro quo arrangements could be in the form of introducing a policy change or granting a license to the person making a financial contribution to the political party in power. The electoral bond scheme and the impugned provisions to the extent that they infringe upon the right to information of the voter by anonymizing contributions through electoral bonds are violative of Article 19(1)(a),¡± Chief Justice of India, Justice DY Chandrachud, said.
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