All India Radio (AIR) IAS UPSC – Supreme Court Ruling on Electoral Bonds

  • IASbaba
  • May 15, 2019
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All India Radio
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Supreme Court ruling on Electoral Bonds


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TOPIC: General studies 2

  • Elections in India
  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation

In News: SC orders all political parties to disclose to EC details of every donation they receive via electoral bonds till 15th May, 2019

  • Election Commission had stated that it will support the electoral bond scheme only if the donor’s name is revealed, including amounts, names, and bank details of the donors.
  • Directed the finance ministry to remove the extra five days of bond issuance introduced by the government for the months of April and May. The law allows only a 50-day spread in January, April, July, and October, during which the bonds can be bought.

What are Electoral Bonds?

Funding of political parties has always been under some kind of suspicion or controversy. Hence in 2017 budget, the government came out with electoral bonds for political donation.

  • The electoral bond scheme, which was introduced through the Finance Act of 2017, allows an individual, or any “artificial juridical person,” including body corporates, to purchase bonds issued by the State Bank of India during specified days of the year.
  • These bonds, which are in the nature of promissory notes, and which are issued in denominations extending from Rs 1,000 to Rs 1 crore, can be donated by the purchaser to a political party of its choice, and the party can then have the bonds encashed on demand.
  • The provisions of the Representation of People Act, the Income Tax Act, the Companies Act and the Reserve Bank of India Act had been amended under the Finance Act, 2017 and Finance Act, 2016 to accommodate the scheme’s objective of keeping the donors identity and details of the political parties receiving the electoral bond anonymous.
  • The amendments create no obligations on the political party to disclose the amount received through electoral bonds to either the poll panel or the income tax department.

Purpose: To curb the use of black money in elections.

Eligibility of the party to receive Electoral Bonds: Only political parties

  • Registered under Section 29A of the Representation of the People Act, 1951
  • Has secured not less than one per cent of votes polled in the last general election to the House of the People or the Legislative Assembly of the State

The scheme’s salient features included

  • Donor anonymity
  • Elimination of caps on corporate donations
  • Loosening of other regulations (such as revealing donations in corporate profit and loss statements)

Why is it in question?

Flouts the right to freedom of expression contained in Article 19(1)(a) of the Constitution: In a democratic system that does not have publicly-funded elections (such as ours), it therefore becomes crucially important for the public to know who funds political parties, in order to critically evaluate whether that party’s policies are designed to actually serve the public good, or whether they are written to benefit its funders.

To break the matter down into its essentials: if a big, multinational corporation (A) donates a huge amount of money to a political party (B), and on coming to power, that political party rewrites the rules in relevant sectors (such as, for example, environmental regulations) benefiting that corporation, then that entire set of transactions must be open to public scrutiny. Secrecy in political funding ensures an asymmetry of information that goes to the root of the democratic process, and the fairness of elections.

KYC would work – No, as it will provide the donor’s name but not the source of money

Criticism on the judgement: The court’s own justification for its order seems to be that it is a weighty matter that requires detailed consideration. This, however, is self-serving: the challenge was filed more than a year ago, and the court had ample time to hear it in detail before the ongoing general elections, given its weightiness.


During the Constituent Assembly debates, BR Ambedkar famously said that the Constitution must guarantee not only one man, one vote, but also, one man, one value. An electoral system that allows limitless, anonymous corporate donations to political parties skews the process irrevocably, and makes a mockery of one man, one value.

Must read: IASbaba’s MINDMAP on Electoral Bonds

Connecting the Dots:

  1. How can electoral bonds help in redefining the process of initiating electoral reforms? Examine.
  2. Write an essay: “One Man, One Value”
  3. Are Electoral Bonds unconstitutional? Discuss.

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