Supreme Court Explores the Dilemma of Anonymous Donations in Electoral Bonds

The Supreme Court continued its hearing on the legal validity of the electoral bonds scheme for a second day, with a focus on the issue of “selective anonymity.” During the proceedings, the court responded to the government’s argument that the absence of provisions for anonymous donations could lead to political funding reverting to black money. The government contended that donors needed protection from “victimization and retribution” if the party they did not support won the election.

Chief Justice DY Chandrachud pointed out that the problem with the scheme is that it offers “selective anonymity,” as purchase records are available with the State Bank of India and accessible to investigative agencies. The court also highlighted that under current laws, a company is required to disclose its overall contributions, even if not specific to any party, which would still reflect on the company’s balance sheet.

The Chief Justice expressed doubt about the government’s argument that declaring the scheme void would lead to cash payments being the safest course. However, the court acknowledged the scheme’s purpose to reduce reliance on cash components in electoral funding and shift towards more accountable sources.

The court shared its concern that the electoral bonds scheme appears to be “a complete information hole” while recognizing the government’s laudable motive. It questioned whether the government had adopted proportional means and raised two critical points. First, whether maintaining confidentiality serves greater public interest, and second, what happens to selective confidentiality when individuals in power can access donor data?

The government’s counter-argument stressed the need for confidentiality to prevent victimization, which, in turn, incentivizes cash payments. It reiterated that there is complete confidentiality.

Earlier in the day, petitioners continued their arguments from the previous day. They claimed that the scheme creates an “artificial distinction between bank transfers by honest individuals and those seeking anonymity.” This distinction was contested, as it does not provide a meaningful difference between various forms of donations.

On the previous day, the petitioners argued that the scheme infringes on citizens’ fundamental right to know about the sources of funding for political parties. They contended that the scheme was designed to reroute black money through anonymous electoral bonds.

The government’s stance was that citizens do not possess an absolute right to information regarding the source of funds. Attorney General R Venkataramani maintained that there must be reasonable restrictions on what information is made available to the public.

The electoral bonds scheme was introduced by the government in 2018 as an alternative to cash donations to increase transparency in political funding. These bonds can be purchased by Indian citizens or domestically incorporated entities and only political parties that have received more than one percent of votes in the last Lok Sabha or state election can accept them.

The Supreme Court’s ongoing deliberation aims to address the concerns related to the electoral bonds scheme and its impact on the transparency and accountability of political funding in India.