Electoral bonds were a mode of funding for political parties in India from their introduction in 2018 until they were struck down as unconstitutional by the Supreme Court on 15 February 2024.
[5] Although introduced in early 2017, the Department of Economic Affairs in Ministry Of Finance notified the Electoral Bond Scheme 2018 in a Gazette only on 2 January 2018.
[6][7] According to an estimate, a total of 18,299 electoral bonds equivalent to a monetary value of ₹9,857 crore (98.57 billion) were successfully transacted during the period spanning from March 2018 to April 2022.
The decision on Electoral Bond (Amendment) Scheme, 2022 was taken shortly prior to the assembly elections in Gujarat and Himachal Pradesh, while the Model Code of Conduct was implemented in both the states.
Within a span of 15 days of issuance, these electoral bonds could be redeemed in the designated account of a legally registered political party under the Representation of the People Act, 1951 (u/s 29A) which had received at least 1% of the votes in the last election.
Enforcing donation amount exceeding ₹2,000 via the banking system would mean the declaration of assets by political parties and also enable their traceability.
[22] Jaitley, while defending the anonymity of bonds, argued that if donors were asked to disclose their identity, they would revert back to cash donations.
Next day, on 30 January 2017, the RBI replied by expressing its severe apprehensions, contending that the electoral bond scheme was susceptible to illicit financial activities, lack of transparency, and possible exploitation.
[27] Critics argued that these changes would allow any person, corporation, or interest group to now anonymously donate an unrestricted amount of funds to any political party, and that no citizen, journalist, or civil society representative would be able to establish any connections.
[26] Postponed from January 2018 and commencing on 1 March 2018, the first tranche of electoral bonds were made available for purchase over a span of ten days.
State Bank of India issued and encashed these electoral bonds in fours of its branches at Chennai, Delhi, Kolkata and Mumbai.
This figure represents a notable increase of 62.39% in comparison to the total sales of Rs 1,056.73 crore achieved through six tranches conducted in March, April, May, July, October and November of 2018.
[45] The data released by the ECI showed that the biggest donor was Future Gaming and Hotels Pvt Ltd run by Mr Santiago Martin.
[47][48] 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.
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.
Government said that the implementation of a restricted time-frame and a significantly brief period of maturity for electoral bonds reduces the likelihood of any potential misuse.
Further, government added that the introduction of electoral bonds will encourage donors to opt for the banking channel as a means of contributing, with their personal information being captured by the authorized issuing entity.
[53] The government requested the dismissal of the petition submitted by the left party, asserting that there is an absence of "invidious or arbitrary discrimination" and no infringement upon any fundamental rights of the Petitioner.
[53] The Election Commission of India submitted its views on the matter to the Supreme Court that the amendments in existing legislation, which permit the utilization of electoral bonds and eliminate the restriction on donations, including those from foreign origins, to political parties, would inevitably result in a surge in the utilization of illicit funds (black money) during the electoral process.
Furthermore, this alteration would have profound consequences on the transparency of financial contributions to political parties, ultimately leading to the manipulation of Indian policies.
Consequently, electoral finances and expenditures emerge as the principal catalysts for corruption and the proliferation of unaccounted funds, hence the black money is widely prevalent in Indian politics.
[22] It is difficult to fully understand the financial aspects of politics in the world's largest democracy due to the lack of transparency in campaign financing.
This lack of transparency renders the bonds susceptible to being deemed "unconstitutional and problematic," as it hinders taxpayers and citizens from obtaining knowledge about the origins of these contributions.
Consequently, this enables the ruling government to effortlessly obtain pertinent information and potentially exploit it in order to exert influence over donors.
[57] In 2017, upon the initial announcement of the bonds, the Election Commission of India expressed concerns regarding the potential compromise of electoral transparency[citation needed].
This apprehension was echoed by various entities including the central bank, the law ministry, and several Members of Parliament, who contended that the electoral bonds would not effectively deter the influx of illicit funds into the political sphere.
Since the ₹2,000 limit still exist for donations in cash, there is an apprehension that political parties will hide a large portion of their illegal money in this category.
[59] The potential consequences of a political party in possession of both Electoral Bonds funds and the Aadhaar and Jan Dhan account numbers of voters are significant.
[61] In 2023, former CM Chandrababu Naidu was arrested and the Andhra Pradesh Criminal Investigation Department (CID) had submitted evidence to the Anti Corruption Bureau (ACB) Court, indicating that the Telugu Desam Party (TDP) received ₹27 crore in the form of electoral bonds as donations during the fiscal year 2018-19.