A five-judge panel of the Supreme Court has rendered its verdict on the legality of the electoral bonds scheme today, unanimously declaring it "unconstitutional." The court articulated that the electoral bonds scheme must be invalidated as it infringes upon citizens' right to information, particularly concerning potential quid pro quo or 'something for something'
arrangements.
The electoral bonds scheme facilitated anonymous contributions from corporations and individuals to political parties through the acquisition of electoral bonds from the State Bank of India (SBI). Notably, exclusive access to the details of bond purchasers is retained by the SBI. Per the scheme's provisions, proceeds from unencashed bonds issued for more than 15 days are directed to the Prime Minister's Relief Fund.
The inception of the electoral bonds dates back to a 2017 Union Budget address delivered by the former Finance Minister, Arun Jaitley. Ideated as a remedy to the opacity surrounding political party funding, the scheme was proposed to address concerns regarding transparency. However, legal challenges arose, arguing that citizens possess a fundamental right to information regarding parties and candidates vying for their votes.
Since its inception, advocates for transparency have consistently raised significant concerns regarding the electoral bonds scheme implemented by the Modi government. Criticisms extend to the manner in which the scheme was introduced, notably including overlooking apprehensions voiced by the then- Reserve Bank of India governor and failing to conduct any form of public consultation.
Legal Challenges
Legal challenges were swiftly initiated, contending that the scheme posed a threat to democracy by enabling anonymous donations and fostering a quid pro quo dynamic between political entities and corporate interests. However, the court's deliberation on the petitions filed in 2017 took several years, and previously, it had declined to suspend the scheme.
Consequently, as recently as January of this year, the State Bank of India continued to sell hundreds of crores worth of electoral bonds. To date, the total value of electoral bonds sold by the State Bank of India exceeds ₹ 16,000 crore. Petitioners contended that the scheme would disproportionately benefit the incumbent governments by ensuring anonymity, thereby enabling the provision of favours such as licenses, leases, policy amendments, and government contracts.
Corporate Influence In The Political Process
The Supreme Court has underscored the disproportionate influence of companies in the political process compared to individuals, noting that corporate contributions are predominantly transactional in nature, aimed at securing reciprocal benefits. The court underscored that financial contributions to political parties typically serve two purposes — to express support for a political entity and as a quid pro quo arrangement. It emphasised that large corporate donations should not obscure the motives behind financial contributions made by other segments of the population.
Interestingly, prior to the implementation of the electoral bond scheme, political parties were obligated to disclose all donations exceeding ₹20,000. Additionally, there existed a restriction on corporate donations, limiting them to no more than 7.5% of profits. However, the electoral bonds scheme abolished this 7.5% limit on corporations and also extended donation eligibility to loss-making companies.
Access To Information
The Supreme Court has ruled that access to information on political party funding is crucial for informed voting, highlighting the correlation between economic and political inequality exacerbated by the intertwining of money and politics. This nexus amplifies the potential for quid pro quo transactions or favourable policy alterations, thereby infringing upon the right to information enshrined in Article 19(1)(a), which safeguards freedom of speech and expression.
Immediate Action
The SC has directed the State Bank of India (SBI) to immediately cease the issuance of electoral bonds and furnish all pertinent details to the Election Commission of India (ECI) by March 6. Furthermore, the ECI has been mandated to promptly disclose all donations within one week of receipt and publish the information on its website by March 13. This decisive action is expected to bring closure to this contentious issue that has lingered for seven long years, having seen a national election, and multiple state elections.
Conclusion
By discontinuing this system, which has been criticised for its potential to facilitate undisclosed donations and favouritism towards incumbent governments, there is an opportunity to foster a more level playing field for all political parties. Moving forward, it is imperative to explore and implement innovative approaches to ensure transparent electoral funding.
This could involve the establishment of mechanisms for public disclosure of donations, strict regulations on corporate contributions, and the promotion of alternative funding models such as public financing or grassroots fundraising. Embracing such initiatives will not only enhance accountability and fairness in the electoral process but also encourage the emergence of diverse ideas and voices in governance, ultimately strengthening democratic principles and institutions.
—The author, Dr. Srinath Sridharan (X : @ssmumbai), is a Policy Researcher & Corporate advisor. the views expressed are personal.
(Edited by : C H Unnikrishnan)
First Published: Feb 15, 2024 4:21 PM IST
