ELECTORAL BOND SCHEME: BANNED

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Updated: 04-04-2024

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The nation's political landscape went through enormous turmoil with the significant decision to ban the Electoral Bond Scheme. The decision taken to ban the scheme prompted applause and condemnation, with proponents celebrating it as a democratic victory and opponents raising questions regarding potential repercussions.

Electoral Bonds: About

Similar to special notes, electoral bonds allow individuals or businesses to donate to political parties anonymously. They were established in 2017 as a new means for parties to raise money for elections and come in a variety of sizes, from small to large.
In 2018, India established electoral bonds to encourage open finance for politics. Since these bonds serve as a channel for financial contributions to political parties from both people and organizations.

Regulations of Electoral Bonds

The Indian government has established regulations that control the electoral bond scheme.
Donors need to hold a KYC-compliant account with a bank that is authorized to issue electoral bonds in order to acquire them.
To obtain and redeem electoral bonds, political parties need to be registered with the Election Commission of India (ECI).
The regulatory framework aims to provide transparency and accountability in political fundraising while simultaneously maintaining the privacy of donors.

Reasons for Banning Electoral Bonds by the Supreme Court

CJI Chandrachud claims that the electoral bonds scheme case is unlawful since it contravenes Article 19(1)(a) of the Indian Constitution.
Furthermore, it was decided that the scheme-related changes to the Companies Act were invalid.
As a result, it has been mandated that the State Bank of India (SBI), which issued electoral bonds, stop doing so right away.

Ban on Electoral Bond Scheme: Supreme Court Bench

The ruling follows the hearing of several petitions against the plan by a 5-judge constitutional bench that included Chief Justice DY Chandrachud, Justice Sanjiv Khanna, Justice BR Gavai, Justice JB Pardiwala, and Justice Manoj Misra.

Chief Justice Chandrachud highlighted the essential significance of political funding openness throughout his lead opinion.
In a separate opinion, Justice Khanna expressed agreement with the chief justice's viewpoint but provided a slightly different justification.
The court's ruling emphasized the need for transparency in government and voter information availability in order to soothe concerns that the electoral bonds might foster quid pro quo agreements.

Key Takeaways of Supreme Court Judgment: Ban on Electoral Bond Scheme

The Supreme Court in the electoral bonds scheme case, ruled that restricting black money is not justifiable by violating someone's right to information. Compared to the effect of electoral bonds on the right to information, there are other alternatives that substantially fulfil the purpose and have minimal impact on the right to information.
Declaring the decision, the CJI stated that the plan violates Article 19(1)(a) of the Constitution, which protects freedom of speech and expression. The panel ruled that people' rights to political affiliation and privacy are part of their fundamental right to privacy.
According to the Constitution Bench in the electoral bonds scheme case, the Electoral Bonds program will give the ruling party an edge. Given the intimate relationship between money and politics, it is also plausible that financial contributions to a political party could result in a quid pro quo agreement.
The Supreme Court (SC) directed the State Bank of India (SBI) to immediately cease issuing Election Bonds. The top court ordered the SBI to provide the Election Commission of India with all the information it has received regarding political parties that have obtained Election Bonds after April 12, 2019, by March 6, 2024.

An important win for free and fair elections in India is the Supreme Court's decision to prohibit electoral bonds. While some saw these bonds as beneficial since they made charitable giving simpler, others were concerned that they would encourage unfairness and dishonesty. With the prohibition in effect, India's elections may now be taking a step in the direction of greater fairness and transparency.

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