By striking down the electoral bonds scheme, introduced by the National Democratic Alliance (NDA) government in 2017, the Supreme Court has put an end to one of the most opaque, devious, corrupt and undemocratic ways of political funding in this country.

The apex court has held the scheme, under which individuals and companies can purchase bonds issued by the State Bank of India (SBI) and donate them to parties of their choice in total anonymity and without limit, violative of the right to information and hence ultra vires Article 19 (1) (a) of the Constitution. The court also found unlimited corporate funding to be unacceptable as it could translate to influence over policymaking and hence violative of the principles of free and fair elections. The court also struck down the amendments to the Representation of the People Act, the Companies Act and the Income Tax Act brought in to facilitate operation of the scheme.

A big takeaway of the order is that the SBI has to disclose the details of the bonds sales, including the details of the purchaser (individual or company) and the beneficiary party, since April 2019 to the Election Commission of India, which has to publish them on its website by March 13. The information will give the public an idea of the nature of the deals the scheme facilitated. It may be remembered that reports have suggested that the BJP has got Rs 10,122 crores, nearly 60 per cent of the 16,437.63 crores collected through the electoral bonds between 2018 and 2022, as per Election Commission data. The Congress, the principal Opposition party, was at a distant second position with Rs 1,547 crores.
The scheme and the logic on which it was based were flawed from the very inception. The government’s obvious plea was that it would introduce transparency in political funding as the bonds are issued and encashed though the banking system. It defended the anonymity clause saying its absence would attract retribution to entities by political parties. 

Both arguments are specious. It’s a welcome idea that political parties get funds from the public, corporates included, in a transparent way which would be a legitimate means to insulate them from the demands of quid pro quo, a sure recipe for corruption. But that argument went up in smoke when the scheme ensured total anonymity to both the purchaser and the beneficiary party. Only a banking channel was introduced to facilitate what is otherwise an act of bribery. 

As the court pointed out, transparency in political funding cannot be achieved by granting absolute exemptions. Though the scheme offers anonymity, this would be meant only for the public and the Opposition. Since the party in power will have an option to get info on the purchasers and beneficiaries of the bonds and retribution always remained a possibility.

Electoral bonds thus proved to be a cure that is worse than the disease. All it did was to legalise corruption. Worse, it had a direct impact on the fairness of the electoral process, the cornerstone of democracy. As the Chief Justice of India pointed out in his judgment, information about the funding of political parties is essential for the effective exercise of the vote. 

The government must draw lessons from the aborted attempt and sit with people who are interested in the furtherance of democracy to design better, transparent ways of political funding. There are better models available across the democratic world, including in the United States where transparent, limited funding to political parties is legal.