The electoral bonds programme was declared "unconstitutional" by the Supreme Court on Thursday, setting in motion a historic ruling. A five-judge Constitution Bench rendered the decision, which comes only months before the Lok Sabha elections and ends a controversial political fundraising scheme that has been questioned from the start.

The State Bank of India (SBI), the bank issuing the bonds, was ordered by the Supreme Court to stop doing so immediately. "Electoral bonds scheme is violative of Article 19(1)(a) and unconstitutional. Amendment to Companies Act are unconstitutional. The issuing bank shall forthwith stop the issue of electoral bonds," the Chief Justice of India, DY Chandrachud, declared in the ruling.

From the scheme's interim ruling in 2019 till the present, the top court has directed SBI to give the Election Commission of India (ECI) comprehensive records of all electoral bond donations received by political parties.

Within three weeks, SBI is supposed to provide detailed data to the ECI. The Supreme Court has directed the ECI to post the information on its official website as soon as it is gathered, guaranteeing openness and public access to the data.

"SBI shall furnish the details of donations through electoral bonds and the details of the political parties which received the contributions. SBI shall furnish the details of electoral bonds encashed by the political parties. SBI shall submit the details to the ECI in three weeks and ECI shall publish these details on the website," the Chief Justice stated.

electoral bonds
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Objective behind the introduction of electoral bonds

The goal of the 2018 introduction of the electoral bonds programme was to improve political donation transparency. Critics countered that the scheme's anonymity encouraged corruption and threw off the fair playing field for political parties.

The Finance Act of 2017, which established the electoral bonds programme, underwent modifications that three petitioners had brought to the Supreme Court. Their argument was that the citizens' right to know is violated and political finance openness is diminished by the secrecy surrounding these bonds. They said that shell businesses are permitted to contribute to the programme.

The programme is supported by the central government, which claims it guarantees that only legal funds are used to finance politics through the appropriate banking channels. They said that by hiding their names, funders are shielded from political parties' reprisal.

However, the court expressed reservations about the scheme's legalisation of party payments and questioned the government about its "selective anonymity" during the hearing. The bench also questioned the removal of the cap on corporate donations to political parties, which allowed them to make larger contributions than they had previously.

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