The Supreme Court of India has scrapped the electoral bond scheme in a landmark judgment delivered on February 15th, 2024. The apex court ruled that the electoral bonds scheme is unconstitutional and violates the right to information of citizens. This judgement comes just months ahead of the 2024 Lok Sabha elections and is expected to significantly impact political funding and level the playing field between parties.

What are Electoral Bonds and How Did They Work?

Electoral bonds were introduced by the BJP government in 2018 as an alternative to cash donations to political parties. They allowed individuals and companies to anonymously donate unlimited amounts of money to parties of their choice.

The bonds, issued by the State Bank of India (SBI) in denominations ranging from Rs 1,000 to Rs 10 million, did not carry details of the buyer or payee. Political parties receiving bonds worth over Rs 20,000 had to disclose the amount to the Election Commission, but not the source.

Supreme Court Finds Scheme Unconstitutional, Calls for Transparency

A five-judge Constitution bench headed by Chief Justice DY Chandrachud ruled by a 4:1 majority that electoral bonds undermine the fairness of elections and enable money laundering and foreign funding of parties.

The scheme infringes on the fundamental right to information of citizens regarding political funding as it allows anonymity and fails to stem corruption, the court noted. It violates Article 19(1)(a) on free speech and expression.

The verdict called for greater transparency in political funding to preserve democratic ideals. The ability of companies to influence policy via such donations is disproportionate compared to individuals, it stated. Hence, treating them alike under this scheme is arbitrary.

BJP Received Over 60% of Electoral Bond Donations Worth ₹16,000 Crores

According to Election Commission data, the BJP received over 60% or ₹10,000+ crores of the ₹16,437 crores worth of electoral bonds sold between 2018 and 2022. In comparison, the Congress received just 10% or ₹1,500+ crores.

On average, over half the income of national parties has come from electoral bonds since their inception. For the BJP, it constitutes 50%+ of total funds. The party emerged as the richest after bonds enabled a 100%+ jump in income from ₹1,000 crores in 2017-18 to ₹2,400 crores in 2018-19.

Meanwhile, Congress saw income grow in 2018-19 but decline steeply again by 2022-23. Regional parties have become even more dependent on bonds for 90%+ of funding.

Verdict Impacts Upcoming 2024 Lok Sabha Elections

The Supreme Court directed the SBI to immediately stop issuing fresh electoral bonds and furnish details of past bonds to authorities. This prevents further anonymous donations to parties in the run-up to the 2024 elections.

BJP is set to be hit hardest by the move as it was the biggest beneficiary of the scheme. The level playing field and transparency brought about by the court are expected to make contestation fairer for all parties.

The verdict has been welcomed by activists, civil society groups and opposition parties who challenged the bonds in court. It marks a big boost for electoral reforms in the country.

Frequently Asked Questions(FAQs)

Q1. What are electoral bonds?

A1. Electoral bonds are financial instruments introduced by the BJP government in 2018 for anonymous, tax-free donations to political parties. They allow unlimited contributions without disclosure of donors.

Q2. Why did the Supreme Court strike down electoral bonds?

A2. The court found electoral bonds promote opacity in political funding, enable quid pro quo deals between parties and donors, and disproportionately benefit large parties like the BJP. This violates the right to transparency.

Q3. Which party gained the most from electoral bonds?

A3. The BJP gained over 60% or ₹10,000+ crores of the total ₹16,000+ crores worth of donations made through electoral bonds between 2018-2022.

Q4. How did electoral bonds impact other national parties?

A4. Parties like Congress and regional parties came to rely on electoral bonds for over 50% and even 90% of funding respectively. But BJP continued to gain a disproportionate share of donations.

Q5. How does the verdict alter the 2024 election landscape?

A5. By restoring transparency and a level playing field months before 2024 polls, the striking down of electoral bonds is expected to make contestation more equitable for all parties.

Q6. What did the Supreme Court say about corporate vs individual donations?

A6. The court noted that corporate donations enable disproportionate influence through quid pro quo deals with parties. Treating corporate and individual contributions alike under the scheme was arbitrary.

Q7. What is the next step after the verdict?

A7. The SBI must immediately stop issuing fresh electoral bonds and furnish details of past bonds to authorities as per the Supreme Court’s directions. This enables the tracing of donations.

Watch the Web Story on Supreme Court Strikes Down Electoral Bonds Scheme

Conclusions

• The electoral bonds scheme provided anonymous, unlimited donations to political parties and violated transparency
• Supreme Court found the scheme unconstitutional days before the 2024 national elections
• BJP gained disproportionately, with a 60% share of over ₹16,000 crores worth of donations
• Congress and regional parties also gained significantly through bonds
• Verdict restores level playing field, fairness ahead of 2024 polls
• Striking down the scheme is a landmark boost for electoral reforms

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