Explained: What Are Electoral Bonds And Why Are They Being Challenged In Court

New Delhi:

The Supreme Court is today hearing a batch of requests challenging the constitutional validity of the electoral bonds scheme, which allows anyone in the country to donate money to political parties anonymously.

A five-judge constitution bench, led by Chief Justice DY Chandrachud, will look at two important issues: the legality of anonymous donations to political parties and the violation of citizens’ right to information about the funding of political parties.

What Are Electoral Bonds?

Electoral bonds are a financial instrument that allows individuals and businesses to donate money to political parties without declaring it. They were introduced by the BJP government in 2018 as an alternative to cash donations. They were pitched as an initiative to bring transparency in political funding.

According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in India.

Who Can Buy Electoral Bonds?

When a person or organisation purchases these bonds, they are not required to disclose their identity to the public or the political party receiving the donations.

These bonds are available in multiple denominations, ranging from Rs 1,000 rupees to Rs 1 crore at all branches of the State Bank of India (SBI). These donations are also interest-free.

While the donor’s identity is not publicly disclosed, the government and the bank maintain a record of the purchaser’s details. This information is kept for auditing purposes and to ensure that only legitimate sources of funding are used.

Which Parties Can Receive Funding Through Electoral Bonds?

Only the political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than 1 per cent of the votes polled in the last election to the Lok Sabha or a state legislative Assembly are eligible to receive electoral bonds.

According to the notification, electoral bonds shall be encashed by an eligible political party only through an account with an authorised bank.

What Is The Argument Against Electoral Bonds?

The Supreme Court will today be hearing four requests challenging electoral bonds, including those filed by Congress leader Jaya Thakur and the Communist Party of India (Marxist). Since the inception of the scheme, it has been a subject of debate with critics questioning if it has actually brought transparency in politics.

The anonymity of donors has led to accusations that it could potentially foster corruption and favoritism in politics. The donor’s identity is not disclosed to the public or the Election Commission, which makes it difficult to track the origin of political contributions.

What Is The Centre’s Stand?

Ahead of the court hearing, Attorney General (AG) R Venkataramani told the court that citizens do not have the right to information under Article 19(1)(a) of the Constitution regarding the source of the funds.

Maintaining that the electoral bonds scheme for funding political parties contributes to clean money, the top law officer has said there can be no general right to know “anything and everything”, without being subjected to reasonable restrictions.

“The scheme in question extends the benefit of confidentiality to the contributor. It ensures and promotes clean money being contributed. It ensures abiding by tax obligations. Thus, it does not fall foul of any existing right,” the AG said in a statement.

Which Party Has Received The Maximum Donations?

The Election Commission data shows that the BJP received more than half of all electoral bonds bought between March 2018 and 2022.

The BJP received Rs 5,270 crore out of a total of Rs 9,208 crore or 57 per cent of all total electoral bonds sold till 2022.

The main opposition Congress party came a distant second, receiving Rs 964 crore or 10 per cent in the same period, while West Bengal’s ruling Trinamool Congress got Rs 767 crore or 8 per cent of all electoral bonds.