The 2024 Supreme Court verdict striking down the Electoral Bonds Scheme has reopened the question of how political parties should be funded. With reference to the Association for Democratic Reforms judgment, examine.

Introduction:

The Electoral Bonds Scheme 2018 allowed anonymous donations to political parties through SBI bearer-bonds; the Finance Act 2017 made enabling amendments to the Companies Act 2013, the RBI Act 1934, the Income Tax Act 1961 and the Representation of the People Act 1951 — a regime struck down by Association for Democratic Reforms v. Union of India (15 February 2024, 2024 INSC 113).

The scheme: It removed the 7.5% cap on corporate donations under Section 182 of the Companies Act 2013 and amended Section 29C of RPA 1951 to exempt bond donations from disclosure, enabling shell-company and foreign-controlled-subsidiary funding without any audit trail visible to voters.

The ADR judgment: A five-judge bench struck down the scheme as violative of voters' right to information under Article 19(1)(a) — recognised in Common Cause v. Union of India (1996) — and as arbitrary under Article 14, holding that informational asymmetry between donors and voters is constitutionally impermissible in a representative democracy.

Post-judgment data: SBI disclosure (April 2024) showed Rs 16,518 crore in bonds redeemed between March 2018 and April 2024, with party-wise and corporate-donor breakdown published, exposing concentration in ruling parties and quid-pro-quo patterns linked to regulatory action and contracts.

Way forward / Conclusion:

A statutory cap on cash donations, a National Election Fund (Indrajit Gupta Committee 1998), full Section 29C RPA disclosure and a Tata Electoral Trust-style transparent intermediary would deliver the transparency the Court demanded.