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Electoral Bonds and the muzzling of people’s right to know who funds political parties

Will the government bring an ordinance to overrule the SC judgement? Unlikely, because all the amendments done to various acts – IT Act, Companies Act, RPA 1951 – have been struck down as unconstitutional. Moreover, SC has upheld the citizens right to know on sources of political funding. Hence any future scheme introduced to curb the role of black money and cash will have to be transparent.

The historic judgment delivered by a five-judge Constitution Bench of the Supreme Court has upheld the basic principles of a citizen’s Right to know under Article 19(1)(a) of the Constitution and the right to free and fair elections. Therefore the amendments brought through the Finance Act,2017 and passed as a Money Bill to Section 29C of Representation of the People Act,1951, Sections 181 & 183(3) of the Companies Act,2013, Section 13A(b) of the Income Tax Act,1961, were struck down as being violative of the Constitution. The court reaffirmed the principle that the citizens have a duty to hold the government of the day accountable for its actions and inactions, and they can effectively fulfil this duty only if the government is open and not clothed in secrecy.

The Apex Court also asserted that there are already means other than electoral bonds to achieve the purpose of curbing black money if that was the primary objective of the scheme according to the Union of India. In its judgment, the court expressed apprehensions such as the scheme’s selective anonymity, institutionalised kickbacks for political parties, unequal access to donor information, with the ruling party potentially possessing insight into contributors’ identities while opposition parties lack such access. The Apex court while holding information as the key in a participatory democracy for the voters to make an informed choice also emphasised on the concept of open governance.

A brief summary of the donations received by political parties via Electoral Bonds (EBs) is given below:

1. Between March 2018 and January 2024, Electoral Bonds worth Rs 16,518 crore were purchased according to RTI responses from the State Bank of India.

2. Maximum electoral bonds (by amount) of Rs 15,631 crore were purchased in the denomination of Rs 1 cr.

3. Between FY 2017-18 to FY 2022-23, BJP declared donations worth Rs 6,566.12 crore and Congress declared Rs 1,123.31 crore from Electoral Bonds, as per their respective audit reports. 54.77 percent of the total EBs declared by the recognised political parties between FY 2017-18 and 2022-23, were received by BJP.

4. The data for FY 2023-24 is not available in the public domain as the audit reports of the political parties are not available on the ECI website yet. Hence, the total donations from Electoral Bonds by political parties so far will be more.

Initially, when the scheme was introduced, BJP and Congress were the main beneficiaries of donations by EBs. However, slowly other regional parties also started receiving donations via EBs, and it became the most preferred mode of donations as the identity of the donors was not revealed.

In the Court hearings in November 2023, Solicitor-General Tushar Mehta said that the common man has no right to know who is donating funds to political parties! The Government’s stand is that scrapping the EB scheme will result in enhanced use of cash and black money again in the polls by the political parties. But the SC has ruled that the Government should consider using other methods to curb the use of black money.

This brings us to the question of what will be the Government reaction to this judgement. Will it bring an ordinance to overrule the SC judgement? Most lawyers feel it is unlikely because all the amendments done to various acts, Income Tax Act, Companies Act, RPA 1951, have been struck down as unconstitutional. Hence, It would be difficult for the Government to override the judgement. Secondly, the SC has upheld the citizens right to know hence any future scheme introduced to curb the role of black money and cash will have to be transparent.

Till then, let’s wait and watch.

This article was originally published in Money Control.