[Editorial Analysis] Here is why the electoral bonds scheme must go

Mains Paper 2: Polity
Prelims level: Electoral bonds
Mains level: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.


• The Supreme Court on Wednesday reserved its order on a plea of a non-governmental organisation seeking a stay on the sale of fresh electoral bonds ahead of state assembly elections in West Bengal, Tamil Nadu, Kerala, Assam and the union territory of Puducherry.

• The electoral bonds in design and operation, they allow for limitless and anonymous corporate donations to political parties. For this reason, they are deeply destructive of democracy, and violate core principles of the Indian Constitution.

The electoral bonds:

• In 2017, the Finance Act was amended to implement electoral bond scheme under which bonds can be bought of any value in multiples of Rs 1000, Rs 10,000, Rs 1 lakh and Rs 1 crore from the SBI by anyone.

• The name of the donar will not be there on the bond while the validity of the bond will be for 15 days. The eligible political parties—with more than one per cent voting share-can show it as the income from voluntary contributions for exemption from income tax.

• Political parties registered under Section 29A of the Representation of the People Act, 1951, which have secured not less than 1% of the votes in the last general election to an Assembly or Parliament, are eligible to open current accounts for redemption of electoral bonds.

The democracy must mean this:

• When citizens cast their votes for the people who will represent them in Parliament, they have the right to do so on the basis of full and complete information.

• There is no piece of information more important than the knowledge of who funds political parties.

• Across democratic societies, and through time, it has been proven beyond doubt that money is the most effective way of buying policy, of engaging in regulatory capture, and of skewing the playing field in one’s own favour.

• This is enabled to a far greater degree when citizens are in the dark about the source of money: it is then impossible to ever know — or assess — whether a government policy is nothing more than a quid pro quo to benefit its funders.

• The Indian Supreme Court has long held and rightly so that the “right to know”, especially in the context of elections, is an integral part of the right to freedom of expression under the Indian Constitution.

• By keeping this knowledge from citizens and voters, the electoral bonds scheme violates fundamental tenets of our democracy.

• It is equally important that if a democracy is to thrive, the role of money in influencing politics ought to be limited.

• In many advanced countries, for example, elections are funded publicly, and principles of parity ensure that there is not too great a resource gap between the ruling party and the opposition.

• The purpose of this is to guarantee a somewhat level playing field, so that elections are a battle of ideas, and not vastly unequal contests where one side’s superior resources enable it to overwhelm the other.

• For this reason, in most countries where elections are not publicly funded, there are caps or limits on financial contributions to political parties.

A blow against democracy:

• The electoral bonds scheme, however, removes all pre-existing limits on political donations, and effectively allows well-resourced corporations to buy politicians by paying immense sums of money.

• This defeats the entire purpose of democracy, which as B.R. Ambedkar memorably pointed out, was not just to guarantee one person, one vote, but one vote one value.

• However, not only do electoral bonds violate basic democratic principles by allowing limitless and anonymous donations to political parties, they do so asymmetrically.
• Since the donations are routed through the State Bank of India, it is possible for the government to find out who is donating to which party, but not for the political opposition to know.

• This, in turn, means that every donor is aware that the central government can trace their donations back to them.

• Given India’s long-standing misuse of investigative agencies by whichever government occupies power at the Centre, this becomes a very effective way to squeeze donations to rival political parties, while filling the coffers of the incumbent ruling party.

• Statistics bear this out: while we do not know who has donated to whom, we do know that a vast majority of the immensely vast sums donated through multiple electoral cycles over the last three years, have gone to the ruling party.

Gaps in government’s defence:

• The government has attempted to justify the electoral bonds scheme by arguing that its purpose is to prevent the flow of black money into elections,

• This justification falls apart under the most basic scrutiny, it is entirely unclear what preventing black money has to do with donor anonymity, making donations limitless, and leaving citizens in the dark.

• The electoral bonds scheme allows even foreign donations to political parties which can often be made through shell companies the prospects of institutional corruption including by foreign sources increases with the electoral bonds scheme, instead of decreasing.

The judiciary needs to act:

• One of the most critical functions of an independent judiciary in a functioning democracy is to referee the fundamentals of the democratic process.

• Governments derive their legitimacy from elections, and it is elections that grant governments the mandate to pursue their policy goals, without undue interference from courts.

• The government itself cannot in good faith regulate the process that it itself is subject to every five years, the courts remain the only independent body that can adequately umpire and enforce the ground rules of democracy.

• It is for this reason that courts must be particularly sensitive to and cognisant of laws and rules that seek to skew the democratic process and the level playing field, and that seek to entrench one-party rule over multi-party democracy.

• There is little doubt that in intent and in effect, the electoral bonds scheme is guilty of both. Thus, it deserves to be struck down by the courts as unconstitutional.

• The conduct of the Supreme Court so far has been disappointing. The petition challenging the constitutional validity of the electoral bonds scheme was filed in 2018.

• The case, which is absolutely vital to the future health of Indian democracy, has been left unheard for three years. The Supreme Court’s inaction in this case is not neutral,

• It is a matter of some optimism that a start was finally made when the Court heard the application for stay before this round of elections.


• The right to know has long been enshrined as a part of the right to freedom of expression under constitution; furthermore, uncapping political donations and introducing a structural bias into the form of the donations violate both the guarantee of equality before law, as well as being manifestly arbitrary.

• The pleas argued that it legitimized electoral corruption at a huge scale, while at the same time ensuring complete non-transparency in political funding. The challenge to those amendments via Finance Act is still pending.

• One can only hope that the Supreme Court will stay the scheme so that it does not further distort the coming round of elections, and then proceed to hear and decide the full case, in short order.


Prelims Questions:

Q.1) With reference to the Great Indian Bustard, consider the following statements:

1. India, effectively the only home of the bustards, now harbours less than 150 individuals in five States.

2. It is listed in Schedule II of the Indian Wildlife (Protection) Act, 1972.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: A

Mains Questions:

Q.1) Highlights the pros and cons of the electoral bond system.

Subscribe to Get Weekly updates

Get daily current affair video, detailed current affairs PPT for quick revision and Free One Liner PDF directly in your inbox. Subscribe now to get this month's one liner for FREE.