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Business News/ News / India/  Supreme Court says electoral bonds 'unconstitutional': Here are 5 reasons why

Supreme Court says electoral bonds 'unconstitutional': Here are 5 reasons why

The Supreme Court declares electoral bonds scheme 'unconstitutional' as it fails to bring transparency to political funding.

The Supreme Court of India (File) (HT_PRINT)Premium
The Supreme Court of India (File) (HT_PRINT)

The Supreme Court on Thursday struck down the electoral bonds scheme, and terms it 'unconstitutional'. The scheme was notified by the central government in 2018 as an alternative to cash donations made to political parties to bring transparency to political funding.

According to the provisions of the scheme, only the political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than 1 per cent of the votes polled in the last elections to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds.

An Electoral Bond is an instrument like a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India.

The bonds are issued specifically for the contribution of funds to political parties.

Here are 5 reasons why the Supreme Court scraped it:

  • Amendment to Section 182 of the Companies Act (allowing blanket corporate political funding) is unconstitutional. Electoral bonds scheme has to be struck down as unconstitutional, said Supreme Court.
  • The Supreme Court said that before amendment, loss making companies were not able to contribute. The amendment does not recognize the harm of allowing loss-making companies to contribute due to quid pro quo. The amendment to Section 182 Companies Act is manifestly arbitrary for not making distincition between loss making and profit making companies.
  • Supreme Courts held that citizens have right to hold the government to account. "Crucial aspect of expansion of right to information is that it is not confined to state affairs but also includes information necessary for participatory democracy," it said. Political parties are relevant units in the electoral process. Information about funding of political parties is essential for electoral choices.
  • The Supreme Court said that the financial contributions to political parties are made for two reasons - for support to political party, or contribution may be way of quid pro quo. "Not all political contributions are made with the intent to alter public policy."
  • "Right to privacy of political affiliation does not extend to contributions made to influence public policy and applies only to contributions below the threshold," said the Supreme Court.


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Published: 15 Feb 2024, 11:59 AM IST
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