Electoral Bonds in India A Scheme Shrouded in Anonymity

Electoral Bonds in India: A Scheme Shrouded in Anonymity

Electoral bonds were introduced in India in 2017 as a supposed remedy to the opaque world of political funding. These bonds, issued by the State Bank of India (SBI), promised transparency by removing cash donations. However, the scheme itself became embroiled in controversy due to its anonymous nature. On February 15, 2024, the Supreme Court of India struck down the electoral bond scheme, deeming it unconstitutional. Let's delve deeper into the concept of electoral bonds, their purpose, the arguments for and against them, and the ultimate verdict.

Unveiling the Mechanism: How Electoral Bonds Worked

Electoral bonds functioned like financial instruments used to donate funds to eligible political parties. These bearer bonds, similar to bank notes, were available for purchase from designated SBI branches during specific windows - four days in January, April, July, and October, with an additional 30 days during a general election year. The bonds came in denominations of Rs.1,000, Rs.10,000, Rs.1 lakh, Rs.10 lakh, and Rs.1 crore.

• Purchasing a Bond: Any Indian citizen (individually or through companies) could purchase these bonds anonymously. The buyer's identity remained undisclosed.
• Redeeming a Bond: Within 15 days of purchase, the bearer of the bond could encash it in the designated account of a registered political party that secured at least 1% of the votes in the previous election. Again, there was no record of the donor or the amount donated to a specific party.

The Rationale Behind Electoral Bonds: Transparency or Secrecy?

The government, while introducing electoral bonds, claimed they would usher in transparency in political funding. The idea was to eliminate the flow of black money through anonymous cash donations. However, critics argued that the scheme achieved the exact opposite.

Purported Advantages:

• Curbing Black Money: By replacing cash donations with traceable bonds, the government argued that the scheme would discourage the use of unaccounted wealth for political funding.
• Boosting Donations: Electoral bonds, with their anonymity, were expected to encourage more individuals and companies to donate to political parties, thereby increasing transparency.

Unveiling the Flaws: Anonymity Breeds Doubt

Despite the government's claims, the electoral bond scheme faced criticism for its lack of transparency. Here's why:

• Anonymous Donations: The anonymity of both donors and recipients created an opaque system. Voters were left in the dark about the source of funds for political parties, raising concerns about potential quid pro quos – donors expecting favors in return for their contributions.
• Undue Influence: Critics argued that anonymity could empower corporations and wealthy individuals to exert undue influence on political parties without public scrutiny. This could lead to policy decisions skewed in favor of these donors.
• Right to Information (RTI) Violation: The scheme was challenged for violating the Right to Information Act (RTI). Since the identities of donors were not disclosed, it prevented citizens from exercising their right to know about the financial dealings of political parties.

The Supreme Court Verdict: Striking Down Anonymity

In February 2024, the Supreme Court, in a landmark judgment, declared the electoral bond scheme unconstitutional. The five-judge bench cited several reasons for this verdict:

• Violation of Transparency and Accountability: The court held that anonymity in political funding undermined transparency and accountability in the electoral process.
• Right to Information: The scheme was deemed violative of the RTI Act, as it restricted the public's right to know about the sources of political funding.
• Undue Influence: The court acknowledged the concerns about potential undue influence from anonymous donors on political parties.

The verdict called for stricter regulations on political funding, emphasizing the need for transparency and accountability.

The Road Ahead: What Lies Beyond Electoral Bonds?

The abolition of electoral bonds leaves a question mark on political funding in India. Here are some possibilities for the future:

• Disclosure Norms: The government might introduce stricter disclosure norms for political donations, mandating parties to reveal the identity and amount received from each donor.
• Public Funding: A renewed debate on public funding of elections might emerge. This system, where the government allocates funds to political parties based on their performance, could be an alternative to private donations.
• Regulation of Corporate Donations: The existing regulations on corporate donations to political parties might be reviewed and strengthened to prevent any misuse of funds.

The Supreme Court's verdict has reignited the debate on political funding reform in India. Moving forward, the focus should be on establishing a transparent and accountable system that fosters a healthy democracy. While electoral bonds promised transparency, they ultimately fell short. Only a system that ensures public scrutiny and discourages undue influence can truly serve the world'

Supreme Court Tightens Noose on SBI: Electoral Bond Details Must Include Bond Numbers

The Supreme Court of India recently tightened the noose on the State Bank of India (SBI) regarding the controversial electoral bond scheme. On March 15, 2024, the court issued a notice to SBI, demanding the disclosure of unique alphanumeric codes linked to each electoral bond purchased and redeemed. This comes after the apex court struck down the electoral bond scheme itself in February 2024, deeming it unconstitutional.

SBI's Incomplete Disclosure:

While the Supreme Court previously directed SBI to share details on electoral bond transactions, including purchase date, amount, and recipient party, the latest development takes things a step further. The court has taken exception to SBI withholding the unique bond numbers, arguing that these codes are crucial for complete transparency.

Why Bond Numbers Matter:

The absence of bond numbers hinders the ability to trace the source of funds. Without them, it's impossible to determine which companies or individuals donated to which political parties. This lack of transparency raises concerns about potential quid pro quos –  donors expecting favors in return for their contributions.

The Court's Rationale:

The Supreme Court's order emphasizes its earlier judgment, which highlighted the right of voters to know whether there are any hidden deals between political parties and corporate interests. The court noted that several companies listed as significant purchasers of electoral bonds have faced scrutiny from central agencies. By revealing the bond numbers, the court aims to shed light on the true identities of the donors.

SBI's Response and the Road Ahead:

SBI is yet to formally respond to the court's notice. However, the development underscores the court's determination to ensure transparency even after striking down the electoral bond scheme. This latest move could potentially lead to a chain reaction, with further investigations into the sources of political funding through electoral bonds in the past.

Looking Forward: Implications for Political Funding:

The Supreme Court's actions have significant implications for political funding reform in India. It compels a more transparent system where citizens can scrutinize the financial dealings of political parties. This could lead to:

• Stricter Disclosure Norms: The government might introduce stricter regulations mandating political parties to reveal the identity and amount received from each donor, including details linked to the electoral bonds used.
• Renewed Debate on Public Funding: The judgment might reignite the debate on public funding of elections, where the government allocates funds to political parties based on performance, potentially reducing reliance on private donations.
• Scrutiny of Corporate Donations: Existing regulations on corporate donations to political parties could be reviewed and strengthened to prevent any misuse of funds.

The Supreme Court's order on electoral bond details is a positive step towards a more transparent and accountable political funding system in India. While the electoral bond scheme itself is defunct, the court's actions ensure that past transactions are not shrouded in secrecy. This paves the way for a more informed electorate and a healthier democracy.