Supreme Court to rule on validity of election bonds today

The Supreme Court will rule on a batch of petitions challenging the electoral bonds scheme on Thursday. The verdict will be delivered by a five-judge Constitution bench, including Chief Justice of India DY Chandrachud.

A bench comprising Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra reserved its verdict in the case on November 2, three days after hearing the case, LiveLaw reported.

The petitioners in the case are Association for Democratic Reforms (ADR), Communist Party of India (Marxist) and Dr Jaya Thakur, challenging the amendments proposed in the Finance Act, 2017, which provided for the electoral bonds scheme paved the way.

The petitioners argue that the anonymity of electoral bonds affects the transparency of political funding and violates voters’ right to information, which is sacrosanct in a democracy.

The Modi government, on the other hand, is defending the scheme as a way to ensure that “white” money is channeled through appropriate banking channels for political financing.

The government further argued that the anonymity of the bonds was necessary to keep the identities of the donors secret so that they would not face any retaliation from the political parties.

What are electoral bonds?

Electoral bonds are monetary instruments similar to promissory notes that are payable to the holder on demand and bear no interest. Through this process, Indian citizens or corporate entities can provide funds to political parties, which can then cash them out.

The government implemented electoral bonds in 2018. This was introduced by the Narendra Modi-led NDA government in Gazette Notification No. 20 on January 2, 2018, to “clean up the political patronage system” in the country.

Electoral bonds were introduced to make political party funding more transparent by allowing political donors to purchase bonds from authorized banks and can only be redeemed by political parties through registered accounts within a specified period of time.

How to buy electoral bonds?

Any Indian citizen or company registered in India can purchase. Electoral bonds can be purchased from State Bank of India branches in one of the cities listed by the government.

The bonds are interest-free and individuals and businesses interested in buying them must first complete prerequisites such as the bank’s KYC (Know Your Customer) for identity verification. It can be purchased in various denominations, ranging from Rs 1,000 to Rs 1 crore.

The bond will not bear the name of the recipient and is valid for only 15 days, during which time it can be used to donate to political parties that meet certain criteria. Electoral bonds can only be redeemed through bank accounts designated by political parties.

Political parties registered under Section 29A of the Representation of the People Act, 1951 and obtaining not less than 1% of the votes cast in the last Lok Sabha or State Legislative Assembly elections are eligible for electoral bonds.