How the Indian Supreme Court Revealed the Business of Electoral Bond

Under the vigilant oversight of the Indian Supreme Court, The State bank of India is mandated to disclose details of donations to the political parties through electoral bonds. Electoral bonds serve as a conduit for political parties to gather funds anonymously, shielding the identity of contributors while providing the party with financial resources. This move by the Supreme Court  is aimed at bringing greater transparency to India’s electoral landscape. Even upon introduction, numerous experts in Indian politics had raised concerns regarding the misuse of electoral bonds, perceiving them as a tool for corrupt politicians to amass election funds and launder illicit money systematically.

Opposition parties contend that the Bhartiya Janata Party (BJP) is leveraging the electoral bond system to its advantage, with the State-controlled Enforcement Directorate allegedly coercing corrupt businessmen to channel funds into electoral bonds, thereby bolstering the BJP’s financial prowess.  However, the BJP counters this argument by pointing out that all parties except the Communist Party have received funds through electoral bonds. 

The Electoral Bond Scheme made its debut during the Union Budget 2017-18, under the leadership of then Finance Minister Arun Jaitley. Classified as a Money Bill, it bypassed certain parliamentary scrutiny processes, leading to allegations of a violation of Article 110 of the Indian Constitution. Jaitley also proposed amendments to the Reserve Bank of India (RBI) Act to enable banks to issue electoral bonds for political funding.

Though initially introduced in early 2017, the Department of Economic Affairs in the Ministry of Finance officially notified the Electoral Bond Scheme 2018 in the Gazette on January 2, 2018. Over the period from March 2018 to April 2022, an estimated total of 18,299 electoral bonds, amounting to ₹985.7 million, were successfully transacted.

On 7th November 2022, amendments were made to the Electoral Bond Scheme, extending the number of sale days from 70 to 85 in a year, particularly in anticipation of assembly elections. This decision coincided with the implementation of the Model Code of Conduct in Gujarat and Himachal Pradesh shortly before their respective assembly elections.

On 15 February, 2024 – a panel of five Judges from the Indian Supreme Court, headed by Chief Justice Dhananjaya Yeshwant Chandrachud, unanimously voted to declare the electoral bonds scheme and any associated changes to the Income Tax Act, Companies Act, and Representation of People Act unlawful. They came to the conclusion that it went against the Right to Information (RTI) and the voter’s right to know about political funding under Article 19(1)(a) of the Constitution. The court also voiced concerns about potential quid pro quo arrangements between corporations and politicians. 

On 6th March, the Election Commission of India (ECI) requested that the State Bank of India furnish it with donor and recipient details. By 13th March, the ECI was to make this information available on its website. Still, the SBI missed the deadline and asked for an extension, which the judge turned down. The ECI was then given the information, which was then posted on their website. 

The Supreme Court ordered the State Bank of India to reveal the electoral bond data to the Election Commission by the end of work hours on 11th March 2024, in response to the State Bank’s refusal to comply with information disclosure requests. The ECI subsequently made this information available on 15th March 2024, and it covered all bonds that were cashed between 12th April 2019, and 24th January 2024. Furthermore, data obtained directly from political parties by the Election Commission was released on 17th March 2024. This data is thought to relate to the time frame that precedes 12th April 2019. 

According to data that was made public, Mr. Santiago Martin‘s Future Gaming and Hotels Pvt. Ltd. was the biggest donor, having bought bonds totaling ₹130 million between 2019 and 2024. Notably, bonds valued at ₹10 million were purchased in just seven days after an Enforcement Directorate operation in India due to allegations of money laundering. Law enforcement officials were also looking into Megha Engineering and Infrastructures Ltd and Vedanta Limited, which were the second and fifth greatest donors, respectively, during this time. Reliance Industries refuted claims that Qwik Supply Chain, the third-largest donor, was a subsidiary of the company. 

As the largest beneficiary of electoral bonds, the Bhartiya Janata Party (BJP) has collected ₹69.865 million since  2018. ₹13.97 million went to the Trinamool Congress, ₹13.34 million to the Indian National Congress, and ₹13.22 crore to the Bharat Rashtra Samithi (BRS). With ₹94.45 million, the Biju Janata Dal (BJD) came in fifth place, followed by the Dravida Munnetra Kazhagam (DMK) at ₹65.65 million and the Andhra Pradesh-based Yuvajana Sramika Rythu Congress Party (YSRCP), which redeemed bonds for approximately ₹44.28 million. Bonds totaling ₹8.975 million were given to the Janata Dal (Secular)

Telugu Desam Party (TDP) redeemed bonds valued at ₹18.135 million, Shiv Sena ₹6.04 million, Rashtriya Janata Dal (RJD) ₹5.6 million, Samajwadi Party ₹1.405 million, Shiromani Akali Dal (SAD) ₹0.726 million, All India Anna Dravida Munnetra Kazhagam (AIADMK) ₹0.605 crore, and National Conference ₹5000000. Both the Bahujan Samaj Party (BSP) and the Communist Party of India (Marxist) (CPI(M)) denied receiving any funding via electoral bonds. 

Among the political parties, the DMK was noteworthy in that it revealed the names of its contributors, something that the BJP, INC, Trinamool Congress (TMC), and Aam Aadmi Party (AAP) did not provide to the Election Commission. Nonetheless, the Election Commission has finally made the documents of the parties that complied public in response to a Supreme Court order. 

As the Supreme Court continues to caution both the State Bank and Election Commission to release all details instead of rationing them, strict orders and timelines have been imposed on the authorities, indicating that more information will be forthcoming in the coming days. The Supreme Court’s decision is not only significant for Indian democracy but also serves as a safeguard against increasing authoritarian tendencies that are encroaching upon the judiciary. The Supreme Court’s intervention to curb negative trends in the Indian electoral landscape serves as both a rescue and a warning for Indian democracy.