
In a landmark judgement, the Supreme Court declared electoral bonds as unconstitutional, stating that they violate the Right to Information and the Right to Freedom of Speech and Expression. Chief Justice of India DY Chandrachud, delivering the unanimous decision, emphasized the importance of transparency in political funding. A five-judge Constitution bench had reserved its verdict on the matter on November 2 last year.
Electoral bonds in India are financial instruments or securities that were introduced in 2018 as a means of making donations to political parties. They can be purchased by any Indian citizen or company incorporated in India from select branches of the State Bank of India. The bonds can then be donated to eligible political parties of the donor’s choice.

The Supreme Court not only called for the striking down of electoral bonds but also directed banks to halt their issuance. Additionally, the State Bank of India was instructed to provide the Election Commission of India (ECI) with all the details of donations received by political parties. The ECI, in turn, has been directed to publish these details on their website by March 31.
CJI Chandrachud highlighted the citizens’ right to information regarding political party funding, stressing its significance in the electoral process. He expressed concerns about potential quid pro quo arrangements resulting from financial support to political parties. Chandrachud also criticized the amendment to Section 182 of the Companies Act, which removed the cap on the maximum amount a company can contribute to a political party. He argued that the amendment fails to differentiate between profit-making and loss-making companies and deemed it unconstitutional.
The electoral bond scheme, introduced by the government on January 2, 2018, aimed to bring transparency to political funding by providing an alternative to cash donations. Under the scheme, only political parties registered under Section 29A of the Representation of the People Act, 1951, and securing at least 1% of the votes in the previous elections are eligible to receive electoral bonds.
Electoral Bonds Controversy
It is worth noting that electoral bonds have been a topic of controversy and scrutiny. Critics argue that the scheme puts a premium on opacity and can be misused for money laundering. Proponents, on the other hand, argue that electoral bonds promote transparency by replacing cash donations with traceable financial instruments. The effectiveness of electoral bonds in cleansing politics and introducing transparency in the electoral system remains a subject of debate.
One of the key features of electoral bonds is that they provide anonymity to the donors. The political party receiving the donation may not be aware of the donor’s identity. However, it is important to note that the State Bank of India, which issues and encashes the bonds, is publicly owned. This has raised concerns that the ruling party may have access to the bank’s data, potentially dissuading large donors from using electoral bonds to donate to opposition parties.