Daily News Analysis

Here is why the electoral bonds scheme must go  

26th March, 2021 Polity


  • The Supreme Court, after a brief hearing on March 24, reserved orders on the question of whether or not to stay the electoral bond scheme, ahead of the upcoming State elections.
  • For the last three years, electoral bonds have been the dominant method of political party funding in India. In their 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.


A blow against democracy:

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


Issue with electoral bonds:

  • The electoral bonds scheme 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.


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.
  • The journalist Nitin Sethi has already debunked this rationale in a detailed 10-part investigative report, which has also highlighted reservations within the government as well as by the Election Commission of India to the electoral bonds scheme.
  • That apart, 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.
  • As 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.
  • However it is of vital importance that the process that leads up to the formation of the government be policed with particular vigilance, as any taint at that stage will taint all that follows.
  • 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.