Understanding Electoral Bonds: Constitutional Implications, Supreme Court Ruling, and the Future of Political Finance in India

Understanding Electoral Bonds: Constitutional Implications, Supreme Court Ruling, and the Future of Political Finance in India

Electoral bonds are a financial instrument introduced by the Government of India in 2018 as a mechanism for individuals, companies, and entities to donate money to political parties. These bonds are similar to promissory notes that can be purchased from specified branches of authorized banks and then deposited into the accounts of political parties within a prescribed time frame. The identity of the donor is kept anonymous, and the political party can encash these bonds only through a designated bank account.

Constitutional Provisions :

There are no specific constitutional provisions regarding electoral bonds in the Constitution of India. However, the use of electoral bonds is subject to the constitutional framework governing political funding, freedom of speech, and transparency in the electoral process.

The scheme operates within the ambit of various laws, including the Representation of the People Act, 1951, and the Income Tax Act, 1961. The Conduct of Election Rules, 1961, provides certain regulations regarding the declaration of donations received by political parties, but specific provisions related to electoral bonds are not explicitly mentioned.

Pros and Cons:

Pros:

1. Anonymity: Donors can contribute to political parties without fear of reprisal or undue influence.

2. Transparency: Political parties are required to disclose the amount of funds received through electoral bonds to the Election Commission of India.

3. Legality: Electoral bonds provide a legal and transparent means for funding political parties, reducing the reliance on cash donations.

4. Accountability: Political parties are held accountable for their financial transactions as they need to report the funds received through electoral bonds.

Cons:

1. Lack of Transparency: Critics argue that the anonymity of donors undermines transparency in political funding.

2. Potential for Corruption: There are concerns that electoral bonds could be used as a means for corporate entities to influence political parties without public scrutiny.

3. Inequality: Small and medium-sized political parties may face challenges in competing with larger parties that have access to significant corporate donations through electoral bonds.

4. Bypassing Contribution Limits: Electoral bonds may allow donors to circumvent legal limits on political contributions by making anonymous donations.

Importance of Explaining History, Present, and Future Perspective:

Understanding the history, present status, and future implications of electoral bonds is crucial for stakeholders, policymakers, and the public to assess its impact on the electoral process, democratic principles, and governance. Examining the evolution of electoral funding mechanisms, current practices, and potential reforms can inform discussions on enhancing transparency, accountability, and fairness in political finance.

Supreme Court Judgment:

In April 2022, the Supreme Court of India delivered a judgment declaring the electoral bonds scheme as violative of Article 19(1)(a) of the Constitution of India, which guarantees the freedom of speech and expression. The court held that the anonymity of donors facilitated by electoral bonds could lead to corruption and undermine democratic principles. The judgment emphasized the importance of transparency and accountability in political funding to uphold the integrity of the electoral process.

Comment:

The Supreme Court's decision to strike down the electoral bonds scheme underscores the significance of upholding constitutional values and principles in regulating political finance. The ruling acknowledges the potential adverse effects of anonymous donations on democratic governance and highlights the need for reforms to promote transparency, accountability, and fairness in political funding. It sets a precedent for future electoral finance laws and underscores the judiciary's role in safeguarding democratic institutions and processes.