What Is Electoral Bond Scheme & Which Party Benefitted The Most From Secret Donations? Here's Everything You Need To Know

What Is Electoral Bond Scheme & Which Party Benefitted The Most From Secret Donations? Here's Everything You Need To Know

In 2018, the Modi government introduced the Electoral Bond Scheme, aiming to reform the electoral process by eliminating the old system where political parties often received anonymous cash donations, including potentially illicit funds.

Vinay MishraUpdated: Friday, February 16, 2024, 08:50 AM IST
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ANI

In a landmark ruling, the Supreme Court today invalidated the electoral bonds scheme, citing its violation on citizens' right to information. Chief Justice of India DY Chandrachud deemed the scheme unconstitutional and arbitrary, warning of potential quid pro quo arrangements between political parties and donors.

The Constitution bench, comprising five judges, concluded that the scheme's stated objectives of combating black money and maintaining donor confidentiality were insufficient grounds for its defense. The court emphasised that electoral bonds were not the sole method to tackle illegal funds.

The Chief Justice directed the State Bank of India to immediately stop facilitating donations and to furnish details of donations made through this mechanism to the Election Commission of India (ECI). Bench ordered ECI to publish this information on its website by March 13th.

What is Electoral Bonds Scheme?

According to the Government of India, an Electoral Bond was a bearer instrument resembling a Promissory Note and was an interest-free banking instrument. Eligibility to purchase the bond was extended to citizens of India or bodies incorporated in India. Electoral Bonds could be issued/purchased for various denominations, including Rs. 1,000, Rs. 10,000, Rs. 1,00,000, Rs. 10,00,000, and Rs. 1,00,00,000, from specified branches of the State Bank of India (SBI).

To buy Electoral Bonds, the purchaser was required to adhere to all existing KYC norms and make payment from a bank account. The bonds did not bear the name of the payee and had a lifespan of 15 days, during which they could only be used to make donations to political parties registered under section 29A of the Representation of the Peoples Act, 1951, and securing at least one percent of the votes in the last general election to the House of the People or a Legislative Assembly.

Electoral Bonds were available for purchase for a period of 10 days each in the months of January, April, July, and October, as specified by the Central Government. Additionally, an extra 30 days were specified by the Central Government in the year of the General Election to the House of People.

An eligible political party could encash Electoral Bonds only through a designated bank account with the authorised bank.

The concept behind the implementation of the scheme

In 2018, the Modi government introduced the Electoral Bond Scheme, aiming to reform the electoral process by eliminating the old system where political parties often received anonymous cash donations, including potentially illicit funds. The government criticised the existing mechanism as lacking transparency.

The Electoral Bond Scheme was promoted as a transparent alternative, requiring eligible political parties recognised by the Election Commission of India (ECI) to receive donations in designated bank accounts.

The late Finance Minister, Arun Jaitley, argued that while online donations or checks were preferable, the requirement to disclose the donor's identity often led them to opt for cash donations. He asserted that the electoral bond scheme ensured all political funding transactions were conducted through banking instruments, presenting a significant improvement over the non-transparent cash donation system.

He contended that the electoral bond scheme provided donors with the option of transparent methods such as checks, online transactions, or electoral bonds, all involving clean money. This contrasted with the existing system, which he described as involving entirely unclean money and lacking transparency.

Who benefited the most from Electoral Bonds?

Since its inception in 2018, a total of Rs 16,518.11 crore worth of electoral bonds have been sold by the State Bank of India, including the most recent issuance.

Out of the total value of electoral bonds amounting to Rs 12,008 crore sold between 2018 and 2023, the BJP received 55% or Rs 6,564 crore, while the Congress received only 9.5% of all bonds sold during the five-year period, totaling Rs 1,135 crore.

A recent report in The Hindu highlighted that a significant portion of the BJP's income, accounting for 54% in the year 2022-23, came from electoral bonds, totaling Rs 2,120.06 crore. Over the six-year period from 2018 to 2023, more than 52% of the BJP's total donations, valued at Rs 5,271.9751 crore, came from electoral bonds, as reported by the Association for Democratic Reforms.

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