Here’s Why Electoral Bonds Are a Danger to Democracy

Electoral Bonds: Supreme Court has asked govt to give details of electoral bonds donors to EC. But is it enough?

(Photo: The Quint/Shruti Mathur)

On Friday, the Supreme Court delivered an interim order refusing to stay the electoral bonds scheme – while at the same time directing all political parties to provide details of donations received through electoral bonds to the Election Commission by 30 May.

This order does not affect the broader challenge to the constitutionality of the scheme, which Chief Justice Ranjan Gogoi noted is a “weighty” issue and requires further time and arguments.

Interim measures had been requested by the petitioners on the basis that the sale of these anonymous bonds during election season affected the level playing field that is supposed to exist at this time, since one political party appears to be the beneficiary of most of the bonds purchased. They also argued that voters should know who is funding political parties at this time when they need to vote for political candidates.

As a result, they’d asked the court to stay the electoral bonds scheme, or at least order the State Bank of India (which sells the bonds) to disclose details about the bonds.

Unfortunately, the Supreme Court’s order on Friday, while directing disclosure of details, could end up being an ineffective one, neither ensuring transparency and the right of voters to know, nor helping to ensure a level playing field during this election.

What Is The Case?

The petitioners in the case include NGOs Common Cause and Association for Democratic Reforms (ADR) – represented by senior Prashant Bhushan – as well as the Communist Party of India (Marxist) – represented by senior advocate Raju Ramachandran.

According to them, the electoral bonds scheme is unconstitutional because it lowers transparency when it comes to political funding, given the anonymity of the bonds and the corresponding amendments to laws on disclosure of funds by parties and corporate donors.

The electoral bonds scheme allows individuals or corporations to purchase electoral bonds, which can then be provided to political parties. The bonds are bearer instruments, so the political parties just need to deposit them in their accounts to obtain the amount – the donor remains anonymous.

The Centre has defended the scheme, saying that it will help tackle black money, that it protects the privacy of donors, and that it cannot be misused since the scheme runs for a limited period of time and requires donors to complete a KYC process to purchase the bonds.

You can read more details about the arguments for and against the bonds here.

The Election Commission objected to the electoral bonds scheme soon after it was announced by the government in 2017 in a letter to the Law Ministry (exclusively revealed by The Quint’s Poonam Agarwal) and also filed an affidavit in the Supreme Court arguing it makes political funding more opaque, potentially allowing black money and foreign funding into Indian politics.

You can read more about the EC’s objections to electoral bonds here.

The electoral bonds scheme is meant to run for 10 days every quarter. However, it can also run for 30 days during a general election, which means it has been announced for April and May as well. This is why a request for an interim stay was requested by the petitioners.

To know what the Government argued in the Supreme Court on electoral bonds, click here.