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India’s top court strikes down electoral bonds scheme, calls it ‘unconstitutional’

India’s supreme court building is pictured in New Delhi on July 9, 2018. – India’s supreme court on July 9 upheld death sentences handed down to three men over the gang-rape and murder of a woman in New Delhi in 2012, saying there were no grounds for a review. (Photo by Sajjad HUSSAIN / AFP) (Photo credit should read SAJJAD HUSSAIN/AFP via Getty Images)

Shajil KumarBy: Shajil Kumar

In a landmark judgement, the Indian Supreme Court on Thursday annulled the electoral bonds scheme, saying it violates the constitutional right to freedom of speech and expression as well as the right to information.

Electoral bonds were launched by Prime Minister Narendra Modi’s government in 2018 to make political funding more transparent. But critics say it has made the process opaque.

It allows individuals and companies to donate money to political parties anonymously and without any limits. The donors need to buy bonds from the government-run State Bank of India (SBI) and donate them to a political party.

The apex court ordered the SBI to discontinue issuing these bonds and disclose to the Election Commission by March 6 the names of the contributors to the six-year-old scheme.

These interest-free, time-limited bonds are issued in fixed denominations – Rs 1,000 to Rs 10 million – and can be purchased from SBI during specific periods throughout the year.

So far, electoral bonds worth Rs 160 billion (£1.5bn) have been sold in 29 tranches. Modi’s Bharatiya Janata Party (BJP) has received most of these funds.

A five-judge Constitution bench headed by Chief Justice D Y Chandrachud directed the Election Commission to publish the information shared by SBI on its official website by March 13.

The bench, also comprising Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra, delivered two separate and unanimous verdicts on the pleas challenging the scheme.

Pronouncing the verdict, the CJI said the scheme is violative of the right to freedom of speech and expression under Article 19(1)(a) of the Constitution.

“They infringe upon the right to information of the voter by anonymising contribution through electoral bonds are violative of Article 19 (1)(a),” the CJI said while pronouncing the verdict.

Chandrachud said the Right to Information (RTI) law is “not confined to state affairs but also includes information necessary for participatory democracy”.

“Political parties are relevant units in the electoral process and information about funding of political parties is essential for electoral choices,” he added.

The court observed that “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 added.

In October last year, the bench began hearing arguments on the four petitions, including those filed by Congress leader Jaya Thakur, the Communist Party of India (Marxist), and the NGO Association for Democratic Reforms (ADR).

Advocate Varun Thakur, who represented Thakur in the case, described the verdict as a setback for the government “because from 2018 to 2024 whatever transactions which have taken place have to be made public”.

“It is a setback because of the way anonymous contributions were received through the scheme. Now accountability will be fixed,” Thakur added.

“The Supreme Court has struck down the Electoral Bond scheme and all the provisions that were made to bring it into effect,” said Prashant Bhushan, a lawyer representing the Association for Democratic Reforms (ADR) watchdog.

The scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding. Elections in India are primarily funded through private donations.

According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in the country. An individual can buy electoral bonds, either singly or jointly with other individuals without disclosing their identity.

Critics have said this eliminates transparency in electoral funding and gives an edge to ruling parties. They also felt it was an opaque way to funnel “black money” to parties.

Verdict welcomed

Opposition Congress party leader Rahul Gandhi welcomed the judgment, accusing the BJP of using the bond system as a “medium for taking bribes and commission”.

Senior Congress leader and former finance minister P Chidambaram on Thursday hailed it as a great victory for transparency.

“The fact that the BJP cornered nearly 90 per cent of the donations by corporates and high net worth individuals will be exposed now. Let the world know who gave money, when the money was given, and to which party it was given,” he said.

Former chief election commissioner S Y Quraishi, a vocal critic of this scheme, termed the Supreme Court verdict a “great boon for democracy”. “Every issue that we raised has been tackled in the judgement,” he added.

The BJP, however, sought to downplay the Supreme Court verdict, saying every decision of the apex court should be respected. Party spokesperson Nalin Kohli said the Opposition is politicising the issue as it does not have any alternative to Prime Minister Narendra Modi’s leadership and the positive work done by his government. (Agencies)

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