NB BUREAU
The Supreme Court on Friday struck down the electoral bonds scheme, which provides complete anonymity to financial contributions made towards political parties.
Describing it as ‘unconstitutional,’ a five-judge Bench led by Chief Justice of India DY Chandrachud delivered a unanimous verdict, asserting that the electoral bonds scheme and the associated amendments to the Representation of People Act, Companies Act, and Income Tax Act infringe upon the voters’ right to information regarding political funding as guaranteed by Article 19(1)(a) of the Constitution.
The apex court ordered the State of Bank of India to stop issuance of electoral bonds herewith.
What are Electoral Bonds?
Electoral bonds serve as financial instruments facilitating contributions to political parties in India. Issued by the State Bank of India (SBI), these bonds are akin to promissory notes or bearer bonds, purchasable by individuals or corporations in various denominations ranging from ₹1,000 to ₹1 crore. Such contributions, enjoying 100% tax exemption for corporate and foreign entities, remain confidential in terms of donor identities.
To donate, individuals or entities must utilize a KYC-compliant account, transferring funds to political parties, which must then encash the donations within a specified timeframe. Notably, there’s no limit on the quantity of bonds one can purchase.
Eligible recipients are political parties registered under Section 29A of the Representation of the People Act, 1951, securing at least 1% of the votes in recent Lok Sabha or state legislative assembly elections.
The electoral bonds scheme was introduced by former Finance Minister Arun Jaitley in the 2017 Budget Session, officially notified in January 2018 via amendments to the Finance Act and Representation of the People Act. Amendments to various other acts were also carried out to implement the scheme.
Challenges to the scheme’s constitutionality arose, with petitions filed in the Supreme Court by entities including CPI(M), Congress, and NGOs. Arguments against the scheme highlighted concerns about transparency, potential for misuse, and alleged promotion of corruption.
However, the government contends that the scheme enhances transparency and acts as a deterrent against illicit money in elections.
