Indian court bans secret electoral donation scheme

India’s Supreme Court has made illegal a disputed system that enabled political parties to receive funding without revealing the identities of their donors.

The court said the electoral bonds system introduced by Prime Minister Narendra Modi’s government in 2017 was unconstitutional.

The system allowed individuals and corporations to buy electoral bonds from state-controlled banks to fund political parties, without details of the donors being made public.

It was challenged by opposition politicians and a civil society group on the grounds that it hindered the public’s right to know who had given money to political parties.

A five-judge bench, led by Chief Justice D Y Chandrachud, struck down the funding mechanism, after hearing a petition filed by the Association for Democratic Reforms, an independent election watchdog, and the Communist Party of India (Marxist).

They had argued the system promoted corruption and money laundering.

The verdict comes weeks before May’s general election, in which Mr Modi is seeking a third term.

Trilochan Sastry, co-founder of the ADR, welcomed the judgment.

“It is a big boost for Indian democracy. Money in elections is one of the biggest factors. Now it will be transparent,” he said.

The petition against the bonds was filed in the Supreme Court in 2018. After a five-year gap, the top court heard the matter last October and reserved its ruling.

“Political contributions give a seat at the table to contributors, it enhances access to legislators,” Mr Chandrachud said. “This access also translates to influence over policymaking.

“There is also a legitimate possibility that financial contributions to a political party would lead to quid pro quo arrangements because of the close nexus between money and politics.”

The judges said that the anonymous electoral bonds were a breach of the right to information under the constitution.

The court also ordered the issuing bank, State Bank of India, to stop sales of electoral bonds and to submit to the Election Commission of India details of donations and the names of the political parties that received the contributions to date.

Prashant Bhushan, the lawyer who represented the petitioners, said the judgment is “salutary” and will enhance democratic processes.

Mr Modi’s government had argued that the legislation was introduced to “cleanse the system of political funding in the country” and that it ensures transparency and promotes adherence to tax obligations.