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What Are Electoral Bonds And Why Is The SC Judgement Against Them Important


In a historic verdict barely weeks before the Lok Sabha polls are set to be notified, the Supreme Court (SC) struck down Thursday the Narendra Modi government’s 2018 electoral bonds scheme of anonymous political funding.

Highlighting that “the information about funding to a political party is essential for a voter to exercise their freedom to vote in an effective manner”, a five-judge Constitution bench, headed by Chief Justice of India D. Y. Chandrachud, said that changes made in the laws to implement the scheme were unconstitutional.

Upholding Democratic Principles

The court emphasized that voters need information about funding to political parties to exercise their freedom to vote effectively. The scheme was found to violate constitutional rights to freedom of speech and expression and the right to information.

In its two separate but unanimous verdicts spanning 232 pages, the court also directed the State Bank of India (SBI), the authorized financial institution under the scheme, to submit by March 6 the details of electoral bonds purchased since April 12, 2019, till date to the Election Commission (EC) which will publish the information on its official website by March 13.

Directives for Greater Accountability

The court’s directives aimed at increasing transparency in political financing, requiring the disclosure of electoral bond details and the refund of unused bonds, underline the importance of accountability in the electoral process.

On April 12, 2019, the SC, in an interim order, asked political parties to submit details of donations via electoral bonds to the EC in a sealed cover to be kept in the safe custody of the commission till further orders.

The SC also directed that electoral bonds that are within the validity period of 15 days but have not been encashed by political parties shall be returned by the political party or the purchaser — depending on who is in possession of the bond — to the issuing bank which shall refund the amount to the purchaser’s account.


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Striking Down Amendments

The bench struck down a set of amendments related to the scheme, deeming them violative of Article 19(1)(a) and unconstitutional.

This included provisions in the Representation of the People Act, the Companies Act, and the Income Tax Act, which permitted non-disclosure of financial contributions received through electoral bonds and unlimited corporate funding to political parties.

Flaws in the Scheme

The court highlighted the flaws in the scheme, noting that it does not adequately address concerns about black money and does not satisfy the least restrictive test necessary for imposing curbs on the right to information.

Moreover, the scheme was criticized for enabling politically influential individuals and corporations to maintain selective anonymity while contributing to political parties.

The verdict represents a significant victory for democracy, reaffirming the importance of transparency and accountability in political financing.

By striking down the electoral bonds scheme, the Supreme Court has taken a significant step towards ensuring fair and transparent elections in India. This landmark judgment underscores the need for comprehensive reforms to strengthen the foundations of Indian democracy.


Image Credits: Google Images

Feature image designed by Saudamini Seth

Sources: The Hindu, India Today, The Indian Express

Find the blogger: Pragya Damani

This post is tagged under: Supreme Court, Electoral Bonds Scheme, Transparency, Political Funding, Constitutional Rights, Accountability, Democracy, Indian Politics, Legal Verdict, Election Commission, Financial Disclosure, Amendments, Black Money, Right to Information, Corporate Funding, Judicial Reform

Disclaimer: We do not hold any right, copyright over any of the images used, these have been taken from Google. In case of credits or removal, the owner may kindly mail us.


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