Introduction
Electoral Bonds were a government-created system to fund political parties anonymously. The Union government introduced them in 2017 through amendments to financial and election laws. The State Bank of India issued these bonds. Any individual or company could buy them and donate them to eligible political parties. The public could not see who donated the money.
The scheme changed the older political funding framework. Earlier, companies could donate only up to 7.5 percent of their average profits and had to disclose recipient parties. The amendments removed these limits. Loss-making companies could donate. Companies with foreign shareholding could donate. Political parties no longer had to reveal donor details for bond-based contributions. This created a new funding architecture. It shifted political finance from partial disclosure to near-total secrecy.
Why Did the Government Introduce Electoral Bonds?
The Union government defended Electoral Bonds as a reform measure. It claimed the scheme would reduce black money in elections. It argued that donors would move from cash to banking channels. It said anonymity would protect donors from political retaliation. The government also relied on institutional trust. It argued that SBI collected KYC details. It said the system created an audit trail. It claimed this balanced transparency with privacy. It further argued that courts should defer to legislative policy choices in electoral finance. According to the government, confidentiality encouraged clean donations. It framed the scheme as a pragmatic response to India’s cash-heavy election system.
Why Did Critics Oppose the Electoral Bond Scheme?
Civil society groups and opposition parties challenged the scheme early. They argued that secrecy harmed democracy. They said voters had a right to know who funded political parties. They warned that anonymity enabled corporate capture of politics. Critics also highlighted inequality. They argued that large corporations could donate unlimited sums. Smaller parties and independent candidates could not compete. They said the scheme favoured ruling parties because donors expected policy benefits. Another concern involved foreign influence. Amendments allowed companies with foreign shareholding to donate. Critics argued this weakened national sovereignty. They also questioned the government’s claim that banking channels alone ensured transparency.
How Did Article 19(1)(a) Become Central to the Case?
Petitioners relied heavily on Article 19(1)(a) of the Constitution. They argued that freedom of speech includes the voter’s right to information. They said meaningful voting requires knowledge of political funding sources. They cited earlier Supreme Court rulings. Those cases recognised disclosure of candidates’ criminal records and assets. Petitioners argued that party funding information was equally important. Money influences policy. Money shapes governance. Voters must know who finances political power. They claimed that the State cannot create legal opacity. They said secrecy imposed a disproportionate restriction on voter rights.
Did the Scheme Violate Political Equality Under Article 14?
Article 14 arguments focused on fairness. Petitioners argued that unlimited corporate donations destroyed equality in political competition. They said Electoral Bonds enabled wealthy donors to dominate elections silently. The scheme treated citizens and corporations unequally. Individual voters had limited political influence. Corporations gained massive, hidden influence. Critics argued this violated the principle of equal political opportunity. They also linked equality to the basic structure doctrine. Free and fair elections form part of India’s constitutional identity. Any law that distorts elections threatens the Constitution itself.
Why Was the Money Bill Route Controversial?
The government passed key amendments through a Finance Act. It certified the law as a Money Bill. This bypassed the Rajya Sabha. Critics challenged this move. They argued that electoral funding rules do not relate solely to taxation or expenditure. They said campaign finance architecture affects democracy, not just finance. They warned that misuse of the Money Bill route weakens bicameralism. This raised a larger constitutional question. Can the executive alter democratic structures without upper house scrutiny?
What Did the Supreme Court Decide in 2024?
In February 2024, a five-judge Constitution Bench struck down the Electoral Bond Scheme. The Court also invalidated related amendments to the Representation of the People Act, the Companies Act, and the Income Tax Act. The Court held that voters have a fundamental right to know who funds political parties. It ruled that State-sponsored anonymity violates Article 19(1)(a). It found that the restriction failed the proportionality test. The Court rejected donor privacy claims. It held that corporate donors cannot demand secrecy when their money influences public policy. It ruled that transparency outweighs privacy in electoral finance. The Court also criticised unlimited corporate funding. It said opacity combined with unlimited donations undermines free and fair elections. It linked this directly to the basic structure doctrine.
How Did the Judgment Change the Right to Know Doctrine?
The verdict expanded the scope of the voter’s right to information. Earlier cases focused on individual candidates. This judgment addressed systemic political finance. The Court recognised that democracy depends on structural transparency. It held that voters need information about funding flows, not just personal details of candidates. This marked a shift toward a deeper conception of electoral accountability. The ruling positioned money as political speech. It treated funding data as constitutionally protected information.
What About Privacy and Presumption of Constitutionality?
The Court balanced privacy against transparency. It acknowledged privacy interests in general. However, it held that large political donations affect public governance. It ruled that such activities attract higher disclosure standards. Some commentators noted tension in the reasoning. The Court applied a presumption of constitutionality but still found the scheme manifestly arbitrary. It justified this by pointing to democratic harm and structural imbalance.
The judgment emphasised outcomes over intent. It focused on effects on democracy rather than legislative motives.
What Are the Broader Implications After the Verdict?
The verdict reshaped political finance reform. Future laws must ensure disclosure of significant donations. Anonymity now faces strict constitutional limits. The ruling also highlighted inconsistency in regulatory policy. NGOs face strict transparency under the FCRA. Political parties enjoyed secrecy under Electoral Bonds. The Court’s decision corrected this imbalance. Finally, the judgment set boundaries on Money Bills. It warned against using fiscal labels to bypass democratic scrutiny. Electoral Bonds now stand as a constitutional lesson. Transparency is not optional in democracy. It is a constitutional requirement.
