Supreme Court Strikes Down Electoral Bonds, All You Need To Know

SC strikes down electoral bonds: The Supreme Court of India on Thursday struck down the electoral bonds dubbing them as unconstitutional and in contravention of the Right to Information Act under 19 (1)(a) of fundamental rights.  

While pronouncing the judgment, the chief justice of India DY Chandrachud said, "Information about funding of political parties is essential for the effective exercise of the choice of voting." 

Simply put, electoral bonds are money instruments that act as promissory notes or bearer bonds that can be purchased by individuals or companies in India. The bonds are issued specifically for the contribution of funds to political parties. These bonds are issued by the State Bank of India (SBI) and are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.

The donations made under this scheme by corporate and even foreign entities enjoyed 100 per cent tax exemption while the identities of the donors were kept confidential - both by the bank as well as the recipient political parties.

Rejecting the Union's argument that Clause 7(4)(c) of the scheme balances the two rights, the court said that the provision tilts the balance in favour of the right to informational privacy because the suitability prong of the proportionality standard is only partly fulfilled. 

Chief Justice Chandrachud accordingly held that the union government has failed to establish that the measure adopted in clause 7(4)(1) of the electoral scheme is the least restrictive.

Break up of Donations between FY17 and FY22

The total donations received by the 31 political parties analysed during the six years was Rs 16,437.635 crore. 

According to the Association of Democratic Reforms, between FY17 to FY22, total donations worth Rs 9,188 crore were received from Electoral Bonds (55.90 per cent). Out of total donations, Rs 4,614.53 crore was received from the corporate sector (28.07 per cent) and Rs 2,635 crore was received from other sources (16.03 per cent). 

The total donations declared by the seven National Parties and 24 Regional parties (from Electoral Bonds, corporate sector, and other donations) between FY 2016-17 and 2021-22 was Rs 13,191 crore (80.247 per cent) and Rs 3,247 crore (19.753 per cent), respectively. 

Electoral Bonds are the most preferred mode of donations for making contributions to National and Regional political parties amounting to Rs 9,188 crore, followed by direct corporate donations worth Rs 4,615 crore.

The total donations declared by the BJP are more than three times the total donations declared by all other National parties. 

During the six years, more than 52 per cent of BJP’s total donations came from Electoral Bonds worth Rs 5272 crore, while all other National parties amassed Rs 1,784 crore. Congress declared the second highest donations from bonds at Rs 952 crore (61.54 per cent of its total donations) followed by All India Trinamool Congress which declared Rs 768 crore (93.27 per cent). 

More than 90 per cent of Biju Janta Dal’s (BJD) total donations came from Electoral Bonds worth Rs 622 crore. 

DMK declared the second highest donations from bonds of Rs 431.50 crore (90.703 per cent of its total donations) followed by TRS which declared Rs 384 crore (80.45 per cent) and YSR-C which declared Rs 330 crore (72.43 per cent). 

Between FY 2016-17 and 2021-22, the total direct corporate donations declared by National parties was Rs 3,895 crore while regional parties declared Rs 720 crore. 

The direct corporate donations declared by 7 national parties are more than five times the corporate donations declared by 31 Regional Parties during the six years.