Will the Supreme Court move break the 'bondage' of 'opacity'?

No. The 30th tranche of electoral bond opened on January 2 and closed 10 days later on January 11, 2024. As per norms, electoral bonds are valid only for 15 calendar days from the date of issue, and no payment will be made to any payee if the bond is deposited after the expiry of the validity period. So technically, even if an electoral bond was issued on the last day of the window, i.e., January 11, the last day for the payee political party to encash it was January 26.

As per precedent, electoral bonds are issued in January, April, July and October. So a new tranche was unlikely, as the country, in all likelihood, would be in the midst of election season in April.

The apex court, in its judgement also highlighted the party-wise donations received via the electoral bond route from 2017–2018 to 2022–2023. The Bharatiya Janata Party (BJP), the Congress Party, and the All India Trinamool Congress (AITC) take the podium.

BJP: ₹6,564 crore

Congress: ₹1,122 crore

TMC: ₹1,092 crore

Electoral bonds worth ₹11,448 crore were issued since the inception of the scheme till FY23-end. BJP has cornered 57% of the donations.

In a written reply to the Lok Sabha, MoS - Finance Pankaj Chaudhary said that total value of Electoral Bonds purchased in these 30 tranches is about ₹16,518 crore. Essentially, this implies that bonds worth ₹5,070 crore were issued in FY24 alone so far. That comes to 44% of the value of the electoral bonds issued in the 5 years from Jan 2, 2018 to FY23-end.

The Supreme Court has also directed the State Bank of India (SBI) to stop issuing electoral bonds. The Court has ordered them to submit details of electoral bonds purchased and encashed by political parties to the Election Commission (EC) by March 6. The EC has been directed to publish information received from the SBI on its website by March 13.

Major (Retd) Anil Verma, the head of the Association for Democratic Reforms (ADR), one of the petitioners in the case, welcomed the verdict. However, he cautioned, “As (far as) finding the actual names of donors (are concerned), I am not too sure because they are also very smart and this was a bearer bond thing. So how many hands it changed, we don't know. So, we may possibly not know who the actual donors were.”

While the SC's directive to SBI may reveal the beneficiaries, the true identity of the donor in many cases may remain a mystery. Something, the RBI had feared, when the scheme was first proposed.

The RBI, in 2017, while raising its objection to the Electoral Bond Scheme had flagged the possibility of shell companies misusing bearer bonds for money laundering transactions. The RBI had argued:

“Though the identity of the person or entity purchasing the bearer bond will be known because of the KYC requirement, the identities of the intervening persons/entities will not be known.”

The RBI's fears were not unfounded. Since, electoral bonds are interest-free bearer instruments, no ownership information is recorded, and the holder of the document is assumed to be its owner. For example, if a businessperson has to donate ₹10 crore to a particular party, he may choose not to do it himself, but via subordinates. So, the true donor, RBI opined, may never be known.

The Finance Ministry, in its response, wrote:

— The RBI has not understood the core purpose of electoral bonds, which is to keep the identity of the donor secret while at the same time ensuring that the donation is only made from tax-paid money.

— The purchase of electoral bonds would be allowed from a KYC-compliant bank account of the purchaser.

— The electoral bonds can be redeemed only upon being deposited into the designated bank account of an eligible political party.

While the Modi government stressed that the key aim of the scheme is to keep donor identity a secret, they have been silent on how donor ANONYMITY when it comes to a scheme that helps fund parties’ political campaigns is a healthy practice in a democracy.

Even former Chief Election Commissioner (CEC) SY Quraishi questioned, “Why would donors want secrecy? They were donating from 70 years. Nothing happened for 70 years, and suddenly they want secrecy.”

The court, in its judgement, observed: “Political contributions give a ‘seat at the table’ to the contributor. That is, it enhances access to legislators. This access also translates into influence over policy-making.”

The Finance Act 2017, among other measures, removed the previous cap on the amount that companies can donate to political parties. Earlier, the cap was set at 7.5% of the average profits of the preceding three fiscal years. Not just that, the requirement for companies to disclose the names of the political parties to which contributions were made in their P&L accounts was also eliminated.

The Supreme Court, in its judgement observed that the deletion of the limit on corporate contributions is manifestly arbitrary. The rationale provided by the court was that it:

— Permits donations by loss making companies.

— Removes the control of shareholders over the decisions of the Board.

— Permits unlimited contribution by corporates and thereby abrogates democratic principles.

The Court also highlighted that the right to privacy of political affiliations does not extend to contributions which may be made to influence policies.

No. While the BJP has cornered a lion's share of the donations, other political parties have been enriched as well. Today, Congress President Mallikarjun Kharge said, “On the day of the launch of Electoral Bonds Scheme, the Congress party had called it opaque and undemocratic.”

However, the Congress has received ₹1,122 crore via the electoral bond route between FY18 and FY23. The other political parties in the top 10 are:

*AAP had declared their donations through bonds/electoral trust, but the party had not declared a separate amount for bonds.

CPI(M) was the only recognised political party to emphatically state that they would not receive donations via the electoral bond route. The party was also one of the petitioners.

Former Law Minister and BJP MP Ravi Shankar Prasad defended the Electoral Bond Scheme. He said, ‘The Electoral Bond Scheme was brought in for a very laudable objective—to bring in transparency in electoral funding, and to reduce the inflow of cash during elections. Even the donors wanted secrecy.’

Senior Supreme Court lawyer Sanjay Hegde said that he doesn't foresee the government taking the ordinance route to bring back the Electoral Bond Scheme by directly overruling a Supreme Court order. Also, Electoral Bonds is only one of the instruments of political donations. Electoral trusts, cash and cheque donations are very much viable.