India’s top court bans funding via electoral bonds
UNDECLARED INDIVIDUALS AND COMPANIES BOUGHT RS165.18B OF SUCH BONDS UP TO NOVEMBER 2023
India’s Supreme Court yesterday scrapped a sevenyear-old election funding system that allows individuals and companies to donate money to political parties anonymously and without any limits, calling it “unconstitutional”.
The system introduced, called Electoral Bonds, was challenged by opposition members and a civil society group on grounds that it hindered the public’s right to know who had given money to political parties.
Under the system, a person or company can buy bonds from the state-run State Bank of India and donate them to a political party.
Undeclared individuals and companies bought Rs165.18 billion ($1.99 billion) of such bonds up to November 2023, according to the Association for Democratic Reforms, a non-government civil society group working on election funding in India. The group was a petitioner challenging the system.
Influencing policy
A five-judge bench headed by Chief Justice D.Y. Chandrachud said: “Political contributions give a seat at the table to the contributor ... this access also translates into influence over policy making.”
Because of the close nexus between money and politics it is possible that financial contributions “would lead to quid pro quo arrangements”, the court said.
Individuals can donate any amount of cash. Companies had been restricted based on their revenue and profits, but the bond system removed those limits.
The Supreme Court brought reinstated corporate donation limits, saying that treating companies and individuals alike for this was “manifestly arbitrary”.
The court directed SBI to not issue any more such bonds, to furnish identity details of those who bought them, and to provide information about bonds redeemed by each political party.
The federal government had defended the policy, saying it mitigates the use of cash or “black money” in political funding, allowing donors a confidential channel to contribute to any party’s funds.
Of the Rs120.1 billion worth of bonds sold up to the end of the fiscal year in March 2023, the ruling Bharatiya Janata Party had received more than half, worth Rs65.66 rupees.