The Supreme Court ruled that the electoral bonds introduced by the government are fundamentally unconstitutional. The Court voters upheld the voters’ right to know who gave how much money to which party—safeguarding the fundamental premise of democracy.
Editor’s note: We’ve offered background on the electoral bonds below—which are also covered in greater detail in this Big Story. You may prefer to watch our video explainer instead
First, a quick primer on electoral bonds
The origin story: In March 2017, Finance Minister Arun Jaitley presented the government’s 2018/19 budget to the Parliament as usual. But the budget contained a section that was most unusual—a brand new way to fund elections called electoral bonds. At the time, Jaitley claimed these will end the practice of giving black money as political donations—and make such payments more transparent.
The ratification: A month later, the electoral bond scheme was passed by the Lok Sabha—as part of the Finance Bill. This bill is passed each year to approve the government’s budget. The BJP-led NDA had a clear majority in the lower house—and easily pushed the bill through despite noisy objections from the Opposition. The Reserve Bank and the Election Commission weren’t happy either.
The handy bit: Finance Bills do not have to be passed by the Rajya Sabha—where the NDA did not have a majority.
The numbers: Since they were introduced, the BJP has received Rs 65.6 billion (6,566.11 crore) in the form of electoral bonds. That’s 57% of all money donated via the scheme. The Congress is a distant second with Rs 11.2 billion (1,123 crore). We do not have numbers for the previous fiscal year.
Point to note: The numbers for Congress have been falling precipitously. The party received Rs 2.36 billion (236 crore) in FY 2021-22—but only Rs 1.71 billion (171 crore) in 2022-23. The BJP’s total income in 2022-23 stood at Rs 23.608 billion (2360.8 crore)—up from Rs 19.17 billion (1917 crore) the year before.
Understanding electoral bonds: It is a financial instrument that allows you, an NGO, trust or a company to make a political donation. You can purchase a bond from any branch of the State Bank of India—in denominations: Rs 1,000; Rs 10,000; Rs 100,000 (1 lakh); Rs 1 million (10 lakh) and Rs 10 million (1 crore). Then you just hand it over to the party of your choice—which has 15 days to cash it.
The case against electoral bonds
Soon after the scheme was passed in Congress, two petitions were filed in the Supreme Court—challenging its constitutionality. One was filed by leading NGOs and the other by the Communist Party of India (Marxist). The case against electoral bonds rests on a single feature of the scheme: The anonymous donor.
The anonymous donor: The electoral bond is a bearer instrument. This means it does not record any details of the owner. And therefore, they are not recorded when the party deposits the bond either. The person or entity has to go through a KYC process to verify their identity when they buy a bond. But the information is kept confidential by the bank—unless demanded by a court or law enforcement agency.
Also this: The new scheme eliminated the old requirement that parties record all details of contributions above Rs 20,000. Also gone: the cap on companies—who could only donate 7.5% of their average profits for the past three years. They also had to disclose their political donations—which isn’t required any more.
The result: The government—via its law enforcement agencies—can determine the identity of any buyer of an electoral bond. But both citizens and the opposition parties are kept in the dark. And It gives the government exclusive access to knowledge that could potentially be used to bully those who fund an opposition party.
The constitutional argument: The petitioners argued that the anonymous donor violates a citizen’s constitutional ‘right to know’—which has been protected by the Supreme Court in the past as part of the right to freedom of speech and expression. In 1975, the Court declared citizens have the right to know “every public act and everything that was done in a public way by their functionaries.” In 2003, the Court again held that “the foundation of a healthy democracy is to have well-informed citizens-voters.”
A formidable array of opponents: Almost every key institution objected to the scheme:
- The Election Commission of India submitted an affidavit in 2019 warning “electoral bonds would wreck transparency in political funding” and open the door to foreign entities and shell companies.
- The Reserve Bank of India repeatedly warned the government about the “potential to increase black money circulation, money laundering, cross-border counterfeiting, and forgery.”
- Even the Law Ministry warned that it may have been illegal to pass electoral bonds as a Finance Bill—to duck the need for Rajya Sabha approval.
The government’s defence: rests on two arguments. One: The bonds offer a ‘clean’ and legal way to donate to parties. The bonds can only be purchased by those who undergo the KYC process. This leaves a paper trail that can be investigated if required. Two: The donors have a constitutional right to anonymity—just as voters have the right to vote in secret. It is protected by the Right to Life under Article 21 of the Constitution.
The Supreme Court ruling: What it said
In brief, the Constitution Bench headed by Chief Justice Chandrachud concluded the electoral bonds violated Article 19(1)(a) of the Constitution—which is the right to freedom of speech and expression. In past judgements, the Court has held this includes the right to information:
"One-sided information, disinformation, misinformation and non-information, all equally create an uninformed citizenry which makes democracy a farce. Freedom of speech and expression includes right to impart and receive information which includes freedom to hold opinions"
In this case, the judges said the right to information “plays a key role in furthering participatory democracy by holding the government accountable. Thus, it is not just a means to an end but an end in itself.”
Also this: The Court said disguising the identity of corporate donors—and allowing them to make uncapped contributions—violated the principle of free and fair elections.
The Court also issued a series of other orders—required to implement the ruling:
One: The State Bank of India has been ordered to immediately stop issuing electoral bonds. Any bonds that have not been cashed must be returned immediately.
Two: SBI must also make public the details of all donations through electoral bonds as of March 6—and share them with the Election Commission. The commission has been ordered to publish these details on its website by March 13.
Three: It struck down the amendment to Section 182 of the Companies Act—which removed the upper limit on how much a company can donate to a political party.
Looking ahead: The great reveal
In his separate opinion, Justice Sanjiv Khanna noted that 94% of the bonds in value were for Rs 1 crore—indicating the staggering number of anonymous corporate donors. So will their identities be revealed soon? Experts aren’t sure. While SBI has to share the data—and the Election Commission has to publish it on their website—the information may not be easy to read:
What remains uncertain at this moment is whether the data shared by SBI will be presented in a format that helps one immediately match the bond buyer to the political party that received the same bond.
Some activists worry that the buyer of the bond may remain unknown. But for the most, almost everyone thinks the identities can be traced: “But recipients may not be mapped immediately. A bond may have changed many hands before donations. Sufficient data will emerge to triangulate with publicly available data.” Or as one EC official puts it, “It may just mean a lot of work.”
The bottomline: Der aaye, par durust aaye… better late than never etc. etc.
Reading list
The Hindu has the key takeaways. Indian Express explains the key legal aspects of the ruling—and the bigger picture on the “red line” drawn for the government. The Telegraph has more on the concerns expressed by the EC. The Hindu has more on what’s next. Hindustan Times explains why the BJP has the most to lose.
