Updated on March 13, 2024
The scheme of Electoral Bond was introduced in The Finance Bill, 2017 during Union Budget 2017-18. It was struck down as “unconstitutional” by the Supreme Court on 15 February 2024 just a few months before the General Election 2024. After Court Intervention, SBI has given the data to Election Commission of India. Details will be published by ECI soon. Given the importance of this development, MBAUniverse.com has prepared a details explanation for this Electoral Bonds GD Topic.
Supreme Court Strikes Down Electoral Bonds
Issuing Electoral Bonds was called as “unconstitutional” by the Supreme Court on 15 February 2024.
The election funding system, which was in place for seven years, was stopped with immediate effect by a five-judge bench headed by Chief Justice D. Y. Chandrachud, who directed the State Bank of India to stop issuing these bonds.
Advent of Electoral Bonds
In 2017, the maximum limit of cash donation to political parties was capped at ₹2,000 by Union Minister for Finance and Corporate Affairs, Arun Jaitley. He proposed to amend the Reserve Bank of India (RBI) Act in order to facilitate the issuance of electoral bonds by banks for the purpose of political funding. Although introduced in early 2017, the Department of Economic Affairs in Ministry Of Finance notified the Electoral Bond Scheme 2018 in a Gazette on 2 January 2018.
What exactly is Electoral Bond?
Electoral Bond is a type of instrument that functions like a Promissory Note and an interest-free banking tool. Any Indian citizen or organization registered in India can buy these bonds after fulfilling the KYC norms laid down by the RBI. It can be procured by a donor solely through the means of cheque or digital payments in various denominations, such as one thousand, ten thousand, one lakh, ten lakh, and one crore from specific branches of the State Bank of India (SBI).
Within a span of 15 days of issuance, these electoral bonds can be redeemed in the designated account of a legally registered political party under the Representation of the People Act, 1951 (u/s 29A) which got at least 1% of the votes in the last election. Electoral bonds features anonymity since it bears no identification of the donor and the political party to which it is issued.
Electoral Bonds worth Rs 16,500 Crores Issued
The total amount generated through electoral bonds between March 2018 and January 2024 stood at ₹16,518.11 crore, according to the Association for Democratic Reforms (ADR), one of the petitioners in the case. Official data for FY24 will be available only after parties file annual audit reports for the year. Ruling party BJP has received the maximum amount of funds generated from this source.
Public Interest Litigation Filled Against Electoral Bond
The electoral bonds scheme has been subjected to legal challenge through a Public Interest Litigation (PIL) in the Supreme Court of India on two grounds. Firstly, it is argued that the scheme has resulted in a complete lack of transparency in political funding in India, thereby preventing the Election Commission and the citizens of the country from accessing crucial information regarding political contributions and parties' significant source of income. Secondly, it is contended that the passage of this scheme as a Money Bill, thereby circumventing the upper house of Parliament — Rajya Sabha, is unconstitutional and infringes upon the doctrine of separation of powers and the citizen's fundamental right to information, both of which form integral components of the basic structure of the Constitution.
Opposition Parties Welcome SC Judgement
Opposition parties have welcomed the judgement. Congress party leader and former finance minister P. Chidambaram said, “The right of the people to know has been placed above all clever legal arguments marshalled to defend the illegal electoral bonds scheme." The Aam Aadmi Party called it an important step in ensuring transparency in election funding. Meanwhile, the ruling Bharatiya Janata Party (BJP), the biggest beneficiary of the scheme, sought to downplay the verdict, saying every decision of the apex court should be respected. The BJP received ₹6,566.13 crore between 2017-18 and 2022-23, according to the data provided in the SC order.
Electoral Bonds Data Given to Election Commission of India With Purchaser & Political Parties Details: SBI Chairman Tells Supreme Court
The Chairman of the State Bank of India (SBI) on March 13 filed a compliance affidavit, informing the Supreme Court that SBI has furnished the details of electoral bonds to the Election Commission of India (ECI). The details have been provided in two separate information packets - the first containing details of the purchasers of the electoral bonds, and the second containing names of the political parties who have encashed these bonds with all the requisite details.
This action by SBI comes after Supreme Court's dismissal of the bank's application for an extension of time to submit electoral bond details. SC, led by Chief Justice DY Chandrachud, said that the information was already within the bank's possession, rejecting claims of the complexity of compiling the data.
Supreme Court has now directed Election Commission of India to compile this information and publish it on their website by 5 PM on March 15, 2024.
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