ELECTORAL BONDS IN INDIA: AN EXPERIMENT CUT SHORT

 

Introduction: Understanding Electoral Bonds (EBs)

Just like banknotes, electoral bonds are "bearer" instruments. 1,000 rupees ($12), 10,000 rupees ($120), 100,000 rupees ($1,200), 1 million rupees ($12,000), and 10 million rupees ($120,000) are the denominations in which they are marketed. They can be purchased by private citizens, public organizations, or business groups, and given to the preferred charity, which has 15 days to redeem them interest-free. EBs have taken over as the main source of fundraising for politics in India; currently, they account for 56% of all political funding. They are very well-liked since they allow anonymous donations.

These are paper instruments that anyone can purchase from the Indian state and donate to a political party so that the party can exchange them for cash. In2018, the Modi administration introduced the program with with the intention of enabling anonymous financial contributions to political parties, so contributing to the cleaning up of India's political finance system. Additionally, the Modi administration eliminated several regulations designed to increase political financial transparency: The earlier law that capped corporate donations was repealed, businesses were exempted from disclosing their contributions in their financial reports, and foreign corporations that had previously been prohibited from funding Indian political parties were now permitted to do so.

 

Eligibility Criteria and Mechanism

- An individual person can buy Electoral Bonds, either singly or jointly with other individuals. 

- Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one percent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the Electoral Bonds. 

- The State Bank of India has been authorized to issue and encash Electoral Bonds through its 29 Authorized Branches.

- The bond shall be valid for fifteen calendar days from the date of issue and no payment shall be made to any payee Political Party if the Electoral Bond is deposited after the expiry of the validity period. 

- The Electoral Bond deposited by an eligible Political Party in its account shall be credited on the same day.

 

Anonymity of Electoral Bonds

There were no names on the bonds. Furthermore, upon redemption of the bond, no name appeared in the banking system. However, this preserved the anonymity of the donor. This indicates that while political parties were aware of the donors' identities, the Indian public was not. The Indian Constitution's article 19 (1)(a) is broken by it. The Constitution's Article 19(1)(a) protects the right to free speech and expression for all citizens. It involves the freedom to use any medium to voice their opinions. A crucial component of this right is press freedom, which guarantees the widespread dissemination of ideas and information. It is also implied by this right that someone cannot be coerced into speaking or expressing an opinion against their will. Additionally, social media sites are this right extends to social media sites as well, however hate speech and illegal content are prohibited. Because anonymity of donors permits possible influence peddling without public examination, it erodes accountability and transparency in political fundraising. Political parties are not compelled to publicize the identity of individual donors, but they must disclose the total amount of monies received through electoral bonds. Concerns concerning the possibility of pay-for-play agreements between political parties and contributors have been raised by this smaller parties may have faced difficulties due to their restricted access to corporate funding.

 

Challenges before the Supreme Court

The matter was taken to the Supreme Court by the Association for Democratic Reforms (ADR), Common Cause; and the Communist Party of India against the Union of India; and the Election Commission. The following issues were raised before the honorable court.

a) whether the electoral bond scheme constitutional?

b)Does the electoral bond scheme violate the voter’s right to information?

c) can the scheme allow anonymity with the view to protect the donor’s right to privacy?

d) does the electoral bond scheme threaten the democratic process, and free and fair elections?

 

Constitutionality of the Electoral Bond Scheme

One of the primary issues examined by the Supreme Court was whether the EB scheme aligned with the constitutional framework of India. The bench, comprising Chief Justice of India D.Y. Chandrachud and Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra, meticulously reviewed the scheme in light of existing legal precedents. Ultimately, the Court unanimously ruled on February 15, 2024, that the EB scheme was unconstitutional.

 

Violation of Voters' Right to Information

A significant concern raised before the court was whether the EB scheme violated the voter's fundamental right to information, as enshrined in Article 19(1)(a) of the Indian Constitution. The Court determined that the scheme indeed encroached upon this right by inhibiting transparency in political funding. Consequently, the bench ordered an immediate cessation of EB sales and mandated the State Bank of India (SBI) to provide comprehensive data on all EB transactions to the Election Commission of India (ECI) for public disclosure.

 

Anonymity and Donor Privacy

The debate surrounding anonymity versus privacy emerged as a critical aspect of the legal discourse. While the Union of India defended anonymity for corporate donors as a measure to combat black money, the Court critically analyzed this argument. Despite recognizing the importance of privacy rights, the bench emphasized that ensuring transparency in political funding outweighed the need for donor anonymity. The scheme's lack of transparency posed a threat to the democratic process and undermined the principle of free and fair elections.

 

Exploring Alternatives

In evaluating the efficacy of the EB scheme, the Supreme Court explored alternative methods for political contributions that would uphold transparency and democratic principles. The bench concluded that more transparent and less restrictive alternatives, such as electronic transfer methods for contributions under Rs. 20,000 and Electoral Trusts for larger contributions, existed. These alternatives offered a balance between facilitating legitimate political funding and preserving the right to information.

 

Proportionality and Fundamental Rights

Central to the Court's decision was the concept of proportionality, wherein the restriction on fundamental rights must be proportionate to the objective sought to be achieved. The bench applied this principle to assess the impact of the EB scheme on the right to information. Ultimately, the Court concluded that the scheme's restrictions outweighed its purported benefits, thereby rendering it unconstitutional.

 

Conclusion: Upholding Democratic Principles

However the bench came to the conclusion that EBS is not the least restrictive way to accomplish the goal of reducing the influence of dark money on elections. The least restricted method for contributions under Rs. 20,000 is through various electronic transfer methods. The least restrictive method for contributions over Rs. 20,000 is through the Electoral Trust. Better substitutes for EBS exist that have an impact on the appropriate The bench decided that there are superior EBS substitutes that have a negligible effect on the right to information. The bench's work was made easier by the proportionality concept, which the Court has been applying in cases involving similar violations of fundamental rights. So the electoral bond scheme threaten the democratic process, and free and fair elections and has to be declare unconstitutional.

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Article Compiled by:-

Prerna Yadav

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.

 

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