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Electoral bonds

Why is it in the news?

  • Recently, the Chief Justice of India has referred the challenge to the validity of the electoral bonds scheme to a Constitution Bench of five judges.
  • The electoral bonds scheme allows for anonymous donations to political parties.

More about the news

  • The petitioner, NGO Association for Democratic Reforms, urged the court to decide the electoral bonds issue before the Lok Sabha election in 2024.
  • The primary issues concerning the electoral bonds scheme include the legalization of anonymous donations to political parties and the violation of citizens’ right to information about political party funding. These issues pertain to violations of Articles 19, 14, and 21 of the Constitution.
  • The scheme has been criticized for anonymizing and sanitizing political donations, providing little information to the public.
  • The question of whether the electoral bonds scheme was passed as a Money Bill and the related legal aspects may be addressed by a seven-judge Bench in the future.
  • Amendments introduced through Finance Acts in 2016 and 2017 opened the door to unlimited political donations and legalized anonymous contributions.
  • The Finance Act of 2016 also amended the Foreign Contribution Regulation Act, 2010, allowing foreign companies with Indian subsidiaries to fund political parties in India, raising concerns about international influence on Indian politics and democracy.
  • The Finance Act of 2017 introduced electoral bonds exempt from disclosure under the Representation of Peoples Act, 1951.

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