Editorial: Landmark verdict

SC ruling on electoral bonds comes as a tight slap on the face of NDA govt which tried to project it as a reformative measure

The Supreme Court’s landmark verdict, striking down the electoral bonds scheme as unconstitutional and violative of the right to information of citizens, is a welcome development. The unanimous ruling by the five-member Constitution Bench, headed by Chief Justice DY Chandrachud, comes as a tight slap on the face of the NDA government which tried to project the scheme, introduced in 2018, as a reformative measure to facilitate donations to political parties. The stinging indictment is significant as it comes just a couple of months ahead of the general elections. While quashing the opaque scheme, the apex court has rightly asked the State Bank of India (SBI), the issuing bank, to furnish all the information pertaining to donations through electoral bonds and details of political parties which received the contributions. No prizes for guessing which political party has been the biggest beneficiary of this scheme. It is the BJP which accounts for the lion’s share of donations made through electoral bonds. Curbing black money in politics cannot be shown as a reason to justify introducing such an arbitrary and non-transparent scheme. There are several other alternative methods to check the flow of black money. Hopefully, the SC ruling will pave the way for a transparent, open and honest system of political funding by individuals and companies. The court has made this distinction very clear. A company has a far greater influence on the political process than donations by individuals. Contributions by companies must be seen as pure business transactions.

In this context, the Constitution Bench has ruled that the amendment to Section 182 of the Companies Act was “manifestly arbitrary” for treating companies and individuals alike. While the privacy of donors is important, transparency in political funding cannot be achieved by granting absolute exemptions. Donors using electoral bonds are technically anonymous but since the SBI is a state-owned entity, the ruling dispensation has access to its data. This would effectively dissuade large donors from using electoral bonds to donate to opposition parties. Earlier, the RBI had cautioned the government that the bonds could be misused by shell companies to facilitate money laundering. In 2019, the Election Commission described the system as “a retrograde step as far as transparency of donations is concerned”. According to a report by the Association for Democratic Reforms (ADR), an election watchdog, the BJP received nearly 90% of all corporate donations. The saffron party got nearly Rs 1,300 crore through electoral bonds in FY23. The Congress got around Rs 171 crore in FY23, down from Rs 236 crore in FY22. The scheme allows donors to anonymously send funds to a political party after buying bearer bonds from the SBI. These bonds are considered anonymous as the donor’s name and other details are not recorded on the document. And, one can buy any number of bonds as there is no cap.