There was always a bad smell about the electoral bonds scheme (EBS) introduced by the ruling BJP government in the Union Budget 2017-18 as a Money Bill (exempt from approval by the Rajya Sabha). The unanimous judgement of a five-judge bench of the Supreme Court delivered on February 15, striking it down as unconstitutional is reassuring because it contradicts widespread belief that the country’s autonomous institutions including the media and judiciary, are buckling under government pressure.

It’s unsurprising that the Supreme Court has struck down the EBS because it was patently in favour of the ruling party at the Centre and states and heavily weighted against opposition parties. Under EBS provisions, corporations and individuals were permitted to purchase electoral bonds with a face value of Rs.1,000 to Rs.1 crore by cheque or through digital channels — during short time windows — from the public sector State Bank of India. Designed as bearer bond promissory notes with assurance of complete confidentiality to purchasers, they could be gifted to registered political parties of choice. An earlier provision in Representation of People Act, 1951, which restricted corporate donations to 7.5 percent of net profit, was abolished enabling even loss-making corporates to purchase electoral bonds.

Self-evidently, this unrestricted freedom given to corporate managements would be detrimental to the interest of their shareholders and would not be exercised without a compelling quid pro quo. Similarly, a ceiling of Rs.20,000 imposed on anonymous individual donations was dispensed with under the new legislation, opening the possibility of corporates and wealthy individuals, assured of confidentiality, heavily influencing the ruling party to formulate donor-friendly legislation or policies. And so it has proved. According to data published by the Election Commission of India, in the seven-year period since the Electoral Bonds Act became law, the BJP ruling at the Centre and in several states has received more than half of the value of bonds issued by SBI. BJP received Rs.6,565 crore via bonds between 2017 and 2023 while the Congress — the country’s major opposition party — Rs.1,123 crore.

In the circumstances, the Supreme Court held the electoral bonds scheme was violative of citizens’ fundamental rights under Article 19 (1) (a) which includes the right to information denied by the confidentiality/anonymity provision of EBS. “Information about funding of political parties is essential for the effective exercise of the choice of voting,” said Chief Justice DY Chandrachud in his ruling. The judges held that citizens’ right to information was of greater import than of the right to privacy of political parties’ donors.

However, it’s doubtful if this judgement will serve the purpose of informing the public about the funding of political parties. At best, it will restore the status quo ante and funding of political parties will be driven underground, necessitating generation of vast amounts of unaccounted ‘black’ money. Its major takeaway is that it has reaffirmed independence of the judiciary.