Session covers what electoral bonds were, why they were introduced, what the petitioners had to say, the Supreme Court ruling, and more
21 February, 2024, Bengaluru: The Centre for Public Policy (CPP) at IIM Bangalore hosted a talk on, ‘The Judgment on Electoral Bonds: Its Background and Significance’, by Prof. Trilochan Sastry, faculty of the Decision Sciences area of IIM Bangalore, on 20th February 2024.
Prof. Trilochan Sastry started his talk by explaining what electoral bonds were and why they were introduced by the Government. “It is actually a promissory note which is a bearer banking instrument. It would not have the purchaser’s name, but the bank will have a record. It can be bought by any individual or group of individuals or by organizations, which can be encashed by an eligible political party only through a bank account.”
Watch the video of the talk here: https://youtu.be/vm3LlIW6ssc?si=BSE74GH_SDUKXVjh
He further explained that the Electoral Bond scheme, passed as a Money Bill, was introduced after amending four Acts. “The main purpose of the scheme was to maintain secrecy of the donor by not exposing donor details to the public, as stated by the Government Attorney General in the Supreme Court. The Government’s take was the bonds would keep a tab on the use of black money for funding elections and would ensure all donations to a party would be in the balance sheet.“
He added that the background leading to bonds lay in the push in the past around 10 years to increase transparency for political party funding and donations. “The ruling of the Election Commission that the Electoral Trust must maintain granular data to the extent possible to trace where the money is coming from and how much goes where, was also a trigger.”
Explaining why funding of elections and regulation of funding were important, he said, “All leading democracies around the world regulate political party funding/ campaign funding because big money can have big influence on elections as well as on government policies and laws.”
Discussing why petitioners challenged the electoral bond scheme, he said, “The three main petitioners are the Association of Democratic Reforms (ADR), an NGO called The Common Cause and the Communist Party of India, which raised concerns on the ground that voters would not know who funded whom. The petitions were filed under Article 32 of the Constitution, and to safeguard Right to Freedom of Speech and Expression and the Right to Information. There was a need for balance between donors’ right to privacy vs voters right to know.”
“The Electoral Bond scheme was introduced after amending the RBI Act, the RP Act, the Income Tax Act, and the Companies’ Act. Before the scheme was introduced, two of Indian’s biggest constitutional bodies, the Election Commission and the Reserve Bank of India, were asked by the Government to give their views on the proposed electoral bond scheme. Both the organizations went on record raising concerns about the same. The scheme was thereafter introduced.”
Prof. Sastry also listed the grounds on which the Supreme Court struck down the electoral bond scheme. “The reason stated was that it would result in vote buying, which will influence electoral outcomes. Unregulated campaign funds and outreach activities can also influence voting behaviour.”
Regarding the specific orders of the Supreme Court on the matter, Prof. Sastry added, “On 15th February the Supreme Court said that SBI must stop issuing electoral bonds, it has to disclose the name of purchaser of each bond by 6th March, and that the Election Commission must publish on their website whatever information it receives from SBI. The four amendments were struck down by the Supreme Court as unconstitutional as well as the relevant portions of the Finance Act.”
A Q&A session followed the talk.