In an interim order, the Supreme Court of India has directed all political parties to disclose particulars related to donations received through electoral bonds. This information has to be submitted to the Election Commission by May 30.

The electoral bond scheme allows donors to anonymously send money to the political party of their choice by purchasing fixed denominations of electoral bonds available at select branches of the State Bank of India. This scheme was introduced during the 2017 budget with an alleged aim of curtailing “black” money. The donor and party details will be available with the bank, but the political party may not be aware of who the donor is.

When the court bench made up of Chief Justice Ranjan Gogoi and Justices Deepak Gupta and Sanjiv Khanna asked: “When the bank issues the electoral bond, does the bank have details on which bond was issued to ‘X’ and which bond was issued to ‘Y’?” Attorney General KK Venugopal, representing the government, said that they did not.

“Why should the voter be concerned? What right does he have to know, as long as funds were being collected in a legitimate way? Any transparency will kill the scheme. Political parties are entitled to raise money from where they want as long as it was legitimate,” Venugopal said.

This further raised concerns regarding curtailing of ‘black’ money, which was the government’s alleged aim. Moreover, the details about the buyer are just a certificate of the source of the money. The bench also said that since the identity of donors is not really known then ‘shell companies’ would turn ‘black money into white’.

“Existence of shell companies and conversion of black to white will always exist. What more could we do? There is no alternative method. We are trying to do something which cannot be worse off because shell companies exist,” Venugopal said.

He further asserted that the identity of the donor had to be maintained to avoid any repercussions. “If the government seeks to stem the flow of ‘black’ money, should the court interfere? It is an experiment and should get the support of the court. Let it continue till the end of these elections, once the new government comes to power, it will review the scheme,” Venugopal said, in his submission to the court yesterday.

A Public Interest Litigation (PIL) suit was filed by the Association for Democratic Reforms (ADR), a non-profit organization, seeking either a stay on the scheme or full disclosure of all donor’s and recipients’ identities. Advocate Prashant Bhushan, appearing for ADR, said that according to Election Commission figures, bonds worth Rs 210 crore of the total Rs 221 crore (US$30.3 million of $31.9 million) purchased had gone to the BJP.

The Chief Justice of India observed that “if the identity of the donor is unknown, your entire exercise to eliminate ‘black’ money becomes a futile exercise.”

In 2018, a controversial law regarding foreign funding to political parties was also amended in a rush. The Foreign Contribution (Regulation) Act, 2010, in its previous version banned political parties from receiving foreign funding. This was done to shield political parties from legal consequences after the BJP and Congress were found guilty of breaking the law.

After the amendment, foreign companies can anonymously donate any amount of money to Indian political parties through their subsidiaries in India by purchasing these electoral bonds.