India’s Supreme Court has scrapped Electoral Bonds, a seven-year-old election funding system, that allows individuals and companies to donate money to political parties anonymously and without any limits.
The move by the apex court comes approximately two months before the nation’s general elections. This decision is seen as a setback for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP), which has been the largest beneficiary of the system it was introduced in 2017.
The system that is based on secretive funding was challenged by opposition parties and a civil society group on the grounds that it hindered the public’s right to know who had given money, and what amount to a certain political party.
Chief Justice Chandrachud Declares The System “Unconstitutional”
A five-judge top court bench headed by Chief Justice DY Chandrachud on Thursday said the system is “unconstitutional”. He directed the state-run State Bank of India (SBI) not to issue any further such bonds, to provide identity details of those who bought them, and to furnish information about bonds redeemed by each political party.
“Political contributions give a seat at the table to the contributor … this access also translates into influence over policy-making,” Chief Justice Chandrachud said.
The Working Of Electoral Bonds
Under the system, a person or company can buy these bonds from SBI in denominations ranging from INR 1,000 to INR 10 million (1 Crore) and donate them to a political party of their choice.
The bonds were first sold in early 2018 and thereafter started getting delivered to the party which can exchange them for cash. The bonds are exempt from tax and do not carry the name of the donor.
Since introduction, electoral bonds had become a prime method of political funding. While the donors are supposed to be anonymous, critics of the system fear the government has access to all the data through the state-owned SBI.
Cash donations are still allowed, but in this case, there is no tax exemption.
For long, there has been a close nexus between money and politics. Therefore, it is possible that financial contributions “would lead to quid pro quo arrangements”, the court said. It also reinstated corporate donation limits, saying that treating companies and individuals alike for this was “manifestly arbitrary”.
Bengali