Explained: What Is Electoral Bonds Scheme And Why Supreme Court Struck It Down
The court also stated that the State Bank of India should stop issuing electoral bonds and prepare up-to-date data and details of political parties that have received these bonds.
The Supreme Court on Thursday unanimously struck down the electoral bonds scheme, which had been introduced in 2018 as an alternative to cash donations made to political parties to bring transparency in political funding, calling it "unconstitutional".
The apex court asserted that the scheme violates the Right to Information under Article 19(1)(a) of the Constitution. The five-judge Constitution bench headed by Chief Justice Chandrachud also quashed the amendments made to the Income Tax Act and the Representation of People Act which made the donations anonymous.
Reading the judgement, Justice Chandrachud said, "Information about political inclination of voters can be used to influence the voters and financial support to political parties can lead to quid pro quo arrangement."
The court also stated that the State Bank of India should stop issuing electoral bonds and prepare up-to-date data and details of political parties that have received these bonds.
The Election Commission of India should publish the information shared by SBI on its website by March 2024. Electoral Bonds that have not been encashed by political parties shall be returned to the purchasers, the court ruled.
The Supreme Court verdict came on a batch of petitions challenging the validity of the electoral bonds scheme.
So what exactly are electoral bonds? Let's find out.
What Are Electoral Bonds?
An electoral bond is a bearer instrument like a promissory note and an interest-free banking instrument. A citizen of India or a body incorporated in India is eligible to purchase the bond. These bonds are sold in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, at State Bank of India branches.
They can be purchased by individuals, groups or corporate organisations and are used specifically for the contribution of funds to the political party of their choice. These bonds assure complete anonymity of the donor as the identities of the donors are kept confidential by the bank as well as the political party that received the donation.
What Is The Electoral Bonds Scheme?
The government introduced the electoral bonds scheme through amendments in the Finance Act, 2017. It was subsequently notified in 2018. As per the scheme, any person who is a citizen of India or corporate groups can purchase these bonds and donate them in favour of any registered political party that has secured at least 1% of the votes polled in the last election to the Lok Sabha or the state legislative assembly.
How Do Electoral Bonds Work?
The purchaser (who wants to donate) can buy an electoral bond(s) only on due fulfillment of all the extant KYC norms and by making payment from a bank account. Electoral bonds are valid for only 15 days during which they can be used for donating only to the political parties registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) and which have secured not less than 1% of the votes polled in the last general election to the House of the People or a Legislative Assembly.
Electoral bonds were available for purchase for the first 10 days of January, April, July, and October as specified by the government notification. The government specified an additional 30 days in the year of the Lok Sabha elections.
