Electoral Bonds Controversy: Stark Disparity in Political Funding Raises Democracy Concerns
Massive funding gap between ruling and opposition parties, fueled by electoral bonds, threatens democratic fairness.
Photo by Brian Pilling
Editorial Analysis
The author highlights the severe disparity in political funding between ruling and opposition parties, primarily due to the Electoral Bonds scheme, and argues that this imbalance undermines democratic fairness and transparency. He emphasizes the need for comprehensive electoral reforms.
Main Arguments:
- There is a stark and growing disparity in political funding, with ruling parties receiving a disproportionately large share of donations compared to opposition parties, as evidenced by ADR data.
- The Electoral Bonds scheme, despite its stated aim of transparency, actually facilitated this opacity and favored the ruling party, making it difficult to trace the source of funds.
- This funding imbalance creates an uneven playing field in elections, potentially compromising democratic fairness and allowing corporate interests to unduly influence policy-making.
- The current system lacks transparency, as political parties are not required to disclose the names of individual donors, making accountability difficult.
Conclusion
Policy Implications
Here's the key point: A significant and growing disparity in political funding between ruling and opposition parties, largely exacerbated by the now-scrapped Electoral Bonds scheme, poses a serious threat to democratic fairness in India. Data from the Association for Democratic Reforms (ADR) reveals that the ruling BJP received a staggering 72.17% of total donations between 2017-18 and 2021-22, while the Congress received only 9.19%.
This is surprising because a healthy democracy relies on a level playing field for all political contenders. This imbalance raises critical questions about transparency, accountability, and the influence of corporate money in elections, making it a crucial topic for UPSC aspirants studying electoral reforms and governance.
Key Facts
BJP received 72.17% of total donations (2017-18 to 2021-22).
Congress received 9.19% of total donations (2017-18 to 2021-22).
Electoral Bonds accounted for 5.1% of total donations to national parties in 2017-18.
ADR reports highlight the disparity in political funding.
UPSC Exam Angles
Constitutional validity of electoral finance laws (Article 19(1)(a), Article 324)
Role of Election Commission of India in ensuring free and fair elections
Impact of money power on democratic processes and level playing field
Judicial review and its significance in upholding constitutional principles
Electoral reforms: past recommendations and future prospects
Transparency and accountability in governance
Visual Insights
Electoral Bonds Scheme: Genesis, Operation, and Scrapping
This timeline traces the key legislative, operational, and judicial milestones of the Electoral Bonds scheme, from its announcement to its eventual striking down by the Supreme Court in 2024.
The Electoral Bonds scheme was introduced with the stated aim of bringing transparency to political funding by encouraging donations through banking channels, replacing cash donations. However, it faced significant criticism for promoting anonymity and potentially increasing corporate influence, leading to its eventual striking down by the Supreme Court.
- 2017Union Budget 2017-18: Electoral Bonds Scheme announced, amendments to Finance Act 2017 passed.
- 2018Electoral Bonds Scheme operationalized in January. First batch of bonds issued.
- 2019Supreme Court directs political parties to submit details of donations received via electoral bonds to ECI in sealed cover (April).
- 2021Petitions challenging the scheme heard by Supreme Court.
- 2024Supreme Court unanimously strikes down Electoral Bonds Scheme as unconstitutional (February 15). Directs SBI to disclose data to ECI.
- 2024ECI publishes Electoral Bonds data provided by SBI on its website (March).
- 2025Ongoing debates on alternative transparent political funding mechanisms and comprehensive electoral reforms.
More Information
Background
Latest Developments
Practice Questions (MCQs)
1. Consider the following statements regarding the Electoral Bonds Scheme: 1. The scheme allowed any Indian citizen or body incorporated in India to purchase electoral bonds. 2. Electoral bonds were introduced through amendments to the Finance Act, 2017, bypassing the Rajya Sabha as a Money Bill. 3. The Supreme Court of India struck down the scheme primarily on the grounds that it violated the Right to Information of the voter. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: D
Statement 1 is correct: The scheme allowed any Indian citizen or body incorporated in India to purchase electoral bonds. Statement 2 is correct: The scheme was indeed introduced through amendments to the Finance Act, 2017, as a Money Bill, which allowed it to bypass the Rajya Sabha. Statement 3 is correct: The Supreme Court, in its landmark judgment, struck down the scheme primarily citing a violation of the voter's fundamental Right to Information, which is an integral part of freedom of speech and expression under Article 19(1)(a) of the Constitution.
2. With reference to political funding and electoral transparency in India, consider the following statements: 1. The Association for Democratic Reforms (ADR) is a statutory body established under the Representation of the People Act, 1951, to monitor political funding. 2. Under current electoral laws, political parties are mandated to disclose the names of individuals and companies donating sums above ₹20,000. 3. The Election Commission of India (ECI) has the power to de-register political parties for non-compliance with financial transparency norms. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 only
- C.2 and 3 only
- D.1, 2 and 3
Show Answer
Answer: B
Statement 1 is incorrect: The Association for Democratic Reforms (ADR) is a non-governmental organization (NGO) and a civil society initiative, not a statutory body established under any Act. Statement 2 is correct: As per Section 29C of the Representation of the People Act, 1951, political parties are required to submit a report of contributions received in excess of ₹20,000 to the Election Commission of India, including the names and addresses of the donors. Statement 3 is incorrect: While the ECI has powers to regulate political parties and ensure compliance with rules, its power to 'de-register' a political party is limited and not explicitly granted for non-compliance with financial transparency norms in the same way it is for other violations. The ECI has often sought more explicit powers for de-registration in such cases, but currently, it can de-recognize parties, which has implications for their electoral symbols and other privileges.