Electoral Bonds Scheme: The Decision, Its Design, and the Supreme Court Verdict

For six years, India’s political parties could receive donations through an instrument that kept the donor’s identity secret from the public, though not necessarily from the government. In February 2024, the Supreme Court struck the entire system down. This article covers how the scheme actually worked, who benefited most from it, and exactly what the court found unconstitutional.

How Electoral Bonds Worked

Introduced in 2018, electoral bonds were bearer financial instruments sold exclusively through the State Bank of India, available in denominations ranging from Rs 1,000 up to Rs 1 crore, according to Al Jazeera’s detailed explainer on the scheme. Individuals, groups, and corporations could purchase these bonds and donate them to any registered political party, which could then redeem them for cash within a 15-day window, interest-free. The defining feature of the scheme was donor anonymity: while cash political donations above Rs 20,000 required public disclosure of the donor’s identity under pre-existing law, electoral bond purchases remained anonymous from the public regardless of how large the donation was.

The Scale of Money Involved

By the time of the Supreme Court’s ruling, electoral bonds had channelled nearly Rs 16,000 crore, over $1.9 billion, into India’s political system since the scheme’s 2018 launch. Between 2018 and March 2022 alone, according to Al Jazeera’s reporting, BJP received approximately Rs 5,271 crore through the scheme, 57 percent of all electoral bond donations during that period, while the Indian National Congress, the main opposition party, received roughly Rs 952 crore, a considerably smaller share.

Why Critics Objected

Critics raised several distinct concerns about the design. Former Reserve Bank of India Governor Raghuram Rajan specifically warned that the anonymity structure was asymmetric in practice, since the government, through its oversight of the State Bank of India, could potentially access donor information even though the public could not, creating a chilling effect where, in his assessment, donors would be considerably less willing to fund opposition parties through a channel the ruling party could potentially trace. The Reserve Bank of India itself separately warned the scheme could facilitate money laundering through shell companies, and India’s own Election Commission described the scheme at the time as “a retrograde step as far as transparency of donations are concerned.”

The February 2024 Supreme Court Verdict

A five-judge constitutional bench led by then-Chief Justice D.Y. Chandrachud unanimously struck down the electoral bonds scheme in February 2024, ruling it unconstitutional and specifically finding it violated citizens’ right to information under Article 19(1)(a) of the Indian Constitution. The court’s ruling didn’t stop at the bonds themselves; it also invalidated the related legislative amendments that had accompanied the scheme’s creation, including changes to the Companies Act that had removed previous limits on corporate political donations, and related changes to income tax and election law that had enabled the donation anonymity structure in the first place.

What the Verdict Required

Following the ruling, the court ordered the State Bank of India to disclose complete details of all bonds purchased and redeemed since the scheme’s 2018 inception, information that had previously never been made public, a disclosure that, once released, allowed journalists and researchers to examine, for the first time, which specific donors had funded which specific parties through the scheme over its six years of operation.

What the Disclosed Data Later Showed

Once the full donor data became public, journalists and researchers spent months cross-referencing it against corporate records, and the resulting reporting identified specific instances where companies facing ongoing government investigations or regulatory action had purchased substantial electoral bonds around the same period, correlations that drew significant public and media attention, though establishing a direct causal link between any specific donation and any specific government decision proved considerably harder to demonstrate conclusively than simply identifying the timing overlaps themselves.

A Six-Year Window That Can’t Be Undone

One structural reality of the ruling is worth noting: while the Supreme Court’s decision ended the scheme going forward and forced disclosure of past records, it couldn’t retroactively restore the transparency that would have existed if donations during those six years had been disclosed in real time as they happened, meaning the political and financial advantages any party gained from the anonymity period between 2018 and 2024 had already been realised by the time the full picture became public, a limitation on the ruling’s practical remedy that some transparency advocates have specifically noted even while welcoming the verdict itself.

Bottom Line

Electoral bonds allowed India’s political parties to receive donations of any size while keeping the donor’s identity secret from the public, a structure that channelled nearly Rs 16,000 crore into the political system with BJP as the largest single beneficiary, before the Supreme Court unanimously struck the entire scheme down in February 2024 as a violation of citizens’ constitutional right to information, a ruling that also forced full public disclosure of six years of previously anonymous donation records.

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Abhyudaya Verma