Assessing India’s Electoral Bond Verdict

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On February 15th, a momentous occasion unfolded in India as the Supreme Court delivered a landmark verdict, declaring the Electoral Bond Scheme unconstitutional. This groundbreaking decision marks a significant stride towards promoting greater transparency and accountability in political funding, a realm long shrouded in secrecy and opacity.

Introduced in 2018, the Electoral Bond Scheme allowed individuals and corporations to purchase interest-free bonds from the State Bank of India, which could then be donated to political parties. Ostensibly aimed at formalizing and digitizing political contributions, the scheme was met with criticism from its inception. Critics argued that it fostered a quid pro quo culture, perpetuated opacity in political financing, and distorted the democratic process.

The scheme’s operation was relatively straightforward. Interested parties were required to possess a KYC-compliant bank account to acquire electoral bonds, which were available in multiple denominations ranging from INR 1,000 to INR 1 crore. Once purchased, donors could transfer these bonds to the designated accounts of political parties meeting specific criteria, such as securing at least 1 percent of the vote in the previous general election. Notably, electoral bonds ensured anonymity, with neither the donor nor the recipient being privy to each other’s identity. Additionally, donations made through electoral bonds were eligible for tax deductions under relevant sections of the Income Tax Act.

However, despite initial intentions to promote transparency in political funding, the Supreme Court of India ruled the Electoral Bond Scheme unconstitutional. Concerns over privacy infringements, lack of adequate checks on political funding, and violation of the Right to Information Act prompted this historic verdict. The court emphasized the scheme’s failure to ensure equality in political representation and directed the State Bank of India to cease issuing electoral bonds while mandating the disclosure of relevant transaction details to the Election Commission of India.

This verdict carries significant ramifications for India’s political landscape. Political parties will likely revert to traditional methods of accepting donations, which may lead to increased scrutiny and regulation. While the electoral bond scheme purported to combat the influence of black money in politics, critics contend that it merely replaced opaque practices with a different form of secrecy. The legal status of electoral bonds underscores ongoing debates surrounding political funding transparency and the delicate balance between privacy and accountability in democracies worldwide.

Advocates of the Electoral Bond Scheme cited several advantages, including promoting transparency and accountability by digitizing political funding and channeling donations through formal banking channels. Additionally, the scheme aimed to reduce the influence of black money in politics by routing donations through legitimate financial institutions. Furthermore, all electoral bonds issued were redeemed through bank accounts disclosed by the Election Commission of India, strengthening regulatory oversight and reducing malpractice. Digitization and security were also touted as benefits, with electoral bonds facilitating safe and digitized election funding, thereby reducing reliance on cash transactions and enhancing money flow visibility.

However, the scheme was not without its limitations. Critics pointed out the lack of complete anonymity, as only the government could access information about contributors and recipients, raising concerns about confidentiality. Moreover, electoral bonds were criticized for their opaque nature, potentially enabling the influx of black money into political funding due to the anonymity of donors. The scheme’s confidentiality regarding donor identities fueled concerns about undisclosed influence on political parties and the potential for misuse by large corporate entities to donate funds without revealing their identities.

The Supreme Court’s verdict resonated with the principles enshrined in the Indian Constitution. By declaring the Electoral Bond Scheme unconstitutional, the court upheld the right to information guaranteed under Article 19(1)(a) and underscored the importance of maintaining a level playing field in democratic processes. The decision represents a watershed moment in India’s fight against corruption and the promotion of fairness in political processes.

However, the road ahead presents new challenges. With the ban on electoral bonds, political parties may resort to older forms of funding, potentially increasing reliance on cash donations. To mitigate this risk, the government should explore alternative mechanisms for political funding, such as capping donations or implementing a regime of transparent political trusts. Moreover, the court’s directives regarding the publication of electoral bond transactions present a unique opportunity to foster greater accountability and transparency in political funding. The timely implementation of these guidelines will empower voters and enable them to make informed choices when casting their ballots.

Ultimately, the Supreme Court’s verdict serves as a testament to the vital role played by judicial activism in preserving the sanctity of democratic institutions. By striking down the Electoral Bond Scheme, the court has set a precedent for future cases concerning political funding and reaffirmed the importance of upholding transparency and accountability in India’s polity. As the nation marches forward, it must heed the lessons from this landmark verdict and strive towards a more transparent, accountable, and equitable democracy for all

With a keen interest in global affairs, I try to bring a fresh perspective to my daily columns on INPAC Times.

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