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The Supreme Court today struck down the Electoral Bonds Scheme as 'unconstitutional' in what many have labelled a landmark decision.
What are Electoral Bonds?
The Government of India notified the Electoral Bond Scheme 2018 through Gazette Notification No. 20 dated January 2 in 2018.
It is a process for the person (Indian citizen) or a corporate entity to fund a political party.
People and corporate companies can buy electoral bonds at a designated State Bank of India in respective city branches listed (here) by the government. They have to fulfill prerequisites such as KYC (Know Your Customer) with the bank for authentication. They can buy Electrol Bonds in range of Rs 1000 and Rs 1 crore ( options include Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 1 Crore).
However, they will have 15 days of buffer time and have to donate to any political party within that time frame.
It should be noted only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the Electoral Bonds.
And, the electoral bonds can be encashed by an eligible political party only through an account with the authorized bank.
The controversy around electoral bonds
Though the money is transferred from a person/corporate company transparently via a bank account, there is no way, even RTI (Right to Information) process to seek details of who the donor is.
However, since the SBI comes under the ruling government's ambit, the latter can know who is donating to which political party. This apparently is one of the major issues pointed out by critics and they say, the information may give leverage to the government to influence a potential donor from not buying electoral bonds for the opposition parties.
Also, it had come to light that very few individual citizens were buying electoral bonds. Actually, close to 99 per cent of electoral bonds were in the denomination of Rs one crore and Rs one lakh, mostly donated by corporate entities.
It should be noted that the government had made two amendments, wherein it has removed the limit on how much a company can buy electoral bonds. Earlier, only 7.5 per cent of the average net profits of a company in the preceding three years were allowed.
Also, the new amendment had enabled overseas corporates to buy electoral bonds. Many believed this might give leverage to foreign agencies to influence the functioning of the government, foreign relations, and the company's investment policies.