NEW DELHI: India’s Supreme Court on Thursday struck down a contentious election funding system that permitted individuals and companies to provide unlimited donations to political parties without disclosing donor identities.
This system, long criticized as undemocratic and favorable to Prime Minister Narendra Modi’s ruling party, has been abolished.
In a unanimous decision by a five-judge constitution bench, the Supreme Court deemed “electoral bonds” unconstitutional, asserting that they violate citizens’ right to information held by the government. Consequently, the court directed the government-owned State Bank of India to cease issuing these bonds and mandated the disclosure of donation details made through them to the Election Commission of India.
Introduced by Modi’s Bharatiya Janata Party (BJP) in 2017, the electoral bond scheme replaced the previous requirement for political parties to disclose the identity of donors contributing over 20,000 rupees (about $240). However, the new financing instrument allowed parties to declare donation amounts received through the bonds without revealing the donors’ identities.
These bonds, available in denominations ranging from 1,000 rupees ($12) to 10 million rupees ($120,000), purportedly aimed to reform political finance by eliminating cash transactions. Yet, critics contend that the system lacks transparency due to the anonymity of donations.
They further argue that the state-owned bank’s record of donors and recipients facilitates government access to information, potentially influencing donors.
The Supreme Court’s verdict, delivered just ahead of a national election, represents a blow to Modi’s ruling party, which has been the primary beneficiary of the electoral bond system.
According to the Association for Democratic Reforms, an election watchdog, anonymous donors contributed over $1.9 billion to political parties through these bonds from 2018 to 2023. According to reports, approximately 57% of these donations favored Modi’s BJP, while the opposition Congress party received only 10%.
Only registered political parties meeting a minimum threshold of 1% of votes in a previous parliamentary or state assembly election were eligible to receive these bonds.
