Understanding Electoral Bonds For UPSC Exams

electoral bonds for upsc exams
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Supreme Court’s DecisionDeclared electoral bonds unconstitutional, citing violations of right to information and freedom of expression (Article 19(1)(a)).
Judgment Date and Key Judges
February 15, 2024 by Chief Justice DY Chandrachud and a bench of other justices led the decision
Main Reasons for UnconstitutionalityInfringement of right to information, facilitation of potential quid pro quo arrangements, lack of proportionality (Article 19(1)(a)).
Specific Directions GivenStop selling electoral bonds, disclose bond purchases and encashments to the Election Commission of India.
Petitioners Challenging the SchemeAssociation for Democratic Reforms (ADR), Communist Party of India (Marxist), Congress leader Jaya Thakur.

What are electoral bonds and how it works?

Understand Understanding Electoral Bonds For UPSC Exams and other competitive exams. Electoral Bonds serve as a financial tool designed for contributing funds to political parties in India. Their introduction by the government aims to enhance transparency in political funding. These bonds offer individuals, companies, and other entities a way to donate to political parties while keeping their identities confidential. They can be obtained from designated banks for a specific amount and are subsequently redeemable by the political parties themselves. They were first introduced in January 2018 as part of the Finance Act of 2017.


Are Electoral Bonds legal?

The legality of electoral bonds has been subject to judicial scrutiny. The Supreme Court, in its decision, stated that electoral bonds are violative of the right to information under Article 19(1)(a) of the Constitution. The court held that the anonymity associated with electoral bonds infringes upon transparency in political funding. Additionally, the court struck down certain provisions related to electoral bonds as unconstitutional, indicating that there are legal challenges surrounding the use of electoral bonds in India.

Who can buy Electoral Bonds?

Electoral bonds can be purchased by any citizen of India or any organization established in the country. This means that individuals, companies, and other organizations are eligible to buy electoral bonds. The identity of the purchaser will not be disclosed during the purchase process.

How do electoral bonds work, from purchasing to encashment?

Individuals or entities purchase these bonds from specified banks using their own funds. Then, they can donate these bonds to political parties of their choice. The key thing is, the identity of the donor remains anonymous, ensuring privacy. The political parties can then redeem these bonds through designated bank accounts. Essentially, electoral bonds facilitate a transparent and legal way for people to contribute to political parties while maintaining confidentiality.

Supreme Court Latest Decision On Electoral Bonds

The Supreme Court’s decision on electoral bonds was significant. It found that these bonds violate the right to information under Article 19(1)(a) of the Constitution. Essentially, the court said that the secrecy surrounding electoral bonds makes political funding less transparent. Moreover, it struck down some parts of the law related to electoral bonds, suggesting that there are legal issues with how they’re used in India.

In summary, on February 15, 2024, the Supreme Court delivered a significant judgment on the electoral bonds scheme. Chief Justice DY Chandrachud and a bench of justices declared the scheme unconstitutional, emphasizing its violation of the right to information and freedom of expression. The court directed the State Bank of India (SBI) to stop issuing electoral bonds and ordered details of bond purchases and encashments to be disclosed to the Election Commission of India (ECI) by March 6, 2024. The ECI is mandated to publish this information by March 13, 2024. This case, initiated by various petitioners including the Association for Democratic Reforms (ADR), challenged the scheme introduced through amendments in the Finance Act 2017. Despite the government’s defense of promoting legitimate funds in political financing, the court found concerns regarding transparency and accountability.

Frequently Asked Questions (FAQS)

  1. What was the Supreme Court’s decision regarding the electoral bonds scheme?
    • The Supreme Court declared the electoral bonds scheme unconstitutional, citing violations of the right to information and freedom of expression under the Constitution, including Article 19(1)(a).
  2. When was the judgment delivered, and who were the key judges involved?
    • The judgment was delivered on February 15, 2024, by Chief Justice DY Chandrachud and a bench of justices including Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra.
  3. What were the main reasons cited by the Supreme Court for declaring the electoral bonds scheme unconstitutional?
    • The court found that the scheme infringed upon the right to information, facilitated potential quid pro quo arrangements, and lacked proportionality in balancing conflicting rights.
  4. What specific directions did the court give regarding the electoral bonds scheme and its implementation?
    • The court directed the State Bank of India (SBI) to stop issuing electoral bonds and ordered disclosure of details of bond purchases and encashments to the Election Commission of India (ECI). This was in reference to amendments made to the Representation of Peoples Act, 1951.
  5. Who were the petitioners who challenged the electoral bonds scheme in court?
    • Petitioners included the Association for Democratic Reforms (ADR), the Communist Party of India (Marxist), and Congress leader Jaya Thakur.
  6. What were the government’s arguments in defense of the electoral bonds scheme during the hearings?
    • The government argued that the scheme promoted legitimate funds in political financing and protected donor anonymity from potential retribution.
  7. How did the Supreme Court address concerns about transparency and accountability in political funding?
    • The court emphasized the importance of transparency in political funding and ordered disclosure of details to ensure accountability, underlining provisions of the Representation of Peoples Act, 1951.
  8. What are the implications of the court’s decision on future political financing in India?
    • The decision sets a precedent for enhancing transparency and accountability in political financing and may lead to reforms in the system.
  9. How will the court’s judgment affect the upcoming elections and political parties?
    • The judgment will likely impact the funding dynamics of political parties and influence campaign financing in future elections, aligning with the regulations set forth in the Representation of Peoples Act, 1951.
  10. What steps will be taken following the court’s decision to ensure compliance with its directives regarding electoral bonds?
    • Measures will include halting the issuance of electoral bonds, disclosing details of purchases and encashments, and publishing this information for public scrutiny by the Election Commission of India, as mandated by the Representation of Peoples Act, 1951.

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