Electoral Bonds and Transparency in Political Funding
Supreme Court’s Landmark Ruling Reshapes Campaign Finance
Accountability in Democracy Strengthened
By Legal Reporter
New Delhi: June 16, 2026:
Political funding has long been a grey area in India’s democratic framework. The Electoral Bonds Scheme (2018), introduced by the government, was intended to provide a transparent mechanism for donations to political parties. However, critics argued it enabled anonymity and opacity. In February 2024, the Supreme Court struck down the scheme as unconstitutional, holding that it violated citizens’ right to information under Article 19(1)(a). This judgment has far-reaching implications for electoral transparency, party accountability, and democratic integrity.
For property and succession matters, advocates often rely on Supreme Court judgments on wills to understand how Indian courts decide disputes related to execution, validity, probate, suspicious circumstances, and inheritance rights.
Background of Electoral Bonds
Introduced in 2018 through amendments in the Finance Act.
Allowed individuals and corporations to purchase bonds from SBI and donate to political parties.
Donor identity remained anonymous to the public, though visible to the government.
Political parties encashed bonds within 15 days.
Legal Issues
Right to Know (Article 19(1)(a))
Citizens have the right to know the sources of political funding.
Anonymity of donors undermined informed electoral choice.
Equality and Non-Discrimination (Article 14)
Scheme disproportionately benefited ruling parties with access to government machinery.
Corporate Donations
Removal of cap on corporate donations raised concerns about undue influence.
Supreme Court’s Observations
Transparency is Essential: Voters must know who funds political parties.
Anonymity Violates Democracy: Concealing donor identity undermines accountability.
Corporate Influence: Unlimited corporate donations distort level playing field.
Government Knowledge vs. Public Ignorance: Scheme allowed state to know donors but kept citizens in the dark.
Relevant Laws and Rules
Representation of the People Act, 1951: Governs elections and party funding disclosures.
Companies Act, 2013: Earlier capped corporate donations at 7.5% of profits; cap removed in 2017.
Finance Act, 2017: Enabled electoral bonds scheme.
Supreme Court Judgment (2024): Declared scheme unconstitutional.
Wider Implications
For Political Parties: Must disclose funding sources; loss of anonymous donations.
For Citizens: Greater transparency in electoral process.
For Corporates: Donations now subject to disclosure, reducing covert influence.
For Policy: Push towards cleaner, more accountable funding mechanisms.
Comparative Perspective
US: Campaign finance regulated by Federal Election Commission; donor disclosures mandatory.
UK: Political donations must be reported; transparency is key.
India (Pre-2024): Electoral bonds allowed anonymity; post-judgment, disclosure mandated.
Inference: India now aligns with global norms of transparency in political funding.
Conclusion
The Supreme Court’s ruling on electoral bonds is a watershed moment in Indian democracy. By striking down anonymity in political donations, the Court has reaffirmed the principle that citizens’ right to know is fundamental to free and fair elections. This judgment strengthens accountability, curbs corporate influence, and sets the stage for comprehensive electoral finance reforms.
FAQs
1. What were electoral bonds?
Financial instruments introduced in 2018 to allow anonymous donations to political parties.
2. Why did the Supreme Court strike them down?
Because anonymity violated citizens’ right to know under Article 19(1)(a).
3. Which laws were involved?
Representation of the People Act, Companies Act, Finance Act amendments.
4. Did the scheme benefit ruling parties?
Yes. Government access to donor data created imbalance.
5. What was the cap on corporate donations earlier?
7.5% of net profits, removed in 2017.
6. What happens now to political donations?
Parties must disclose sources; transparency is mandatory.
7. How does this compare globally?
US and UK mandate donor disclosures; India now follows similar norms.
8. Does the ruling affect individuals?
Yes. Citizens gain access to information about who funds parties.
9. What principle did the Court reinforce?
That transparency in political funding is essential for democracy.
10. What is the broader impact?
Strengthens accountability, curbs corporate influence, and promotes electoral reform.