Electoral Bonds Scheme Struck Down

For six years, nobody could see who funded which political party through electoral bonds. In February 2024, the Supreme Court ended that. This lesson covers the Electoral Bonds Scheme and why it was struck down.

1Chapter 1: The Verdict

Must Know

15 February 2024

• A five-judge Constitution Bench unanimously (5-0) struck down the Electoral Bonds Scheme, 2018.
• It held the scheme violated voters’ right to information under Article 19(1)(a).
• The reason: the scheme hid who funded which political party.

Not really anonymous

• Bonds were sold through the State Bank of India, a government-owned bank.
• So the government could, in principle, always trace who bought which bond.
• The judgment called this “selective anonymity”.
• Donors stayed hidden from the public and from opposition parties, but not from SBI or law-enforcement agencies. (Source: The Tribune.)
• That one-sided secrecy, hidden from voters and visible to the State, became a central plank of the Court’s reasoning.

2Chapter 2: How the Scheme Worked

Good to Know

The mechanism

• Individuals and companies bought bonds from SBI.
• They then donated the bonds to political parties.
• Parties could redeem them without disclosing donor identity.

The corporate cap that vanished

• Before the scheme, corporate donations were capped as a share of a company’s profits.
• The scheme’s enabling law removed that cap.
• The judgment also scrutinised this change.

One Money Bill, four laws changed

• The Finance Act, 2017 created the legal basis for electoral bonds.
• It was passed as a Money Bill. So it needed only Lok Sabha approval.
• That bypassed the Rajya Sabha’s power to block or amend it.
• The Act amended four laws at once: the RBI Act, the Income Tax Act, the Companies Act (removing the donation cap) and the Representation of the People Act.
• (Source: PRS Legislative Research.)
• The February 2024 judgment did not rule on whether using a Money Bill this way was constitutional.
• That question was referred to a separate seven-judge bench, and remains pending.

3Chapter 3: The Long Fight

Good to Know

Six and a half years

• The Association for Democratic Reforms (ADR) filed the lead petition in September 2017, months after the scheme was announced.
• Common Cause and the CPI(M) filed connected petitions in January 2018, right after the scheme was notified.
• The Court declined to stay the scheme along the way.
• In April 2019, it only ordered parties to submit donor data in sealed cover.
• In March 2021, it rejected a stay request before state elections. It called the anonymity concerns “misconceived” at the time.
• Bonds kept selling for the entire 6.5 years the case was pending.
• The case reached a five-judge Constitution Bench on 16 October 2023, and was decided four months later. (Source: ADR.)

After the verdict

• On 13 March 2024, SBI had to disclose all bond purchase and encashment data. The Election Commission published it.
• It showed ₹16,518 crore in bonds had been encashed.
• On 2 August 2024, the Court refused to order confiscation of funds already received.
• On 25 September 2024, it dismissed review petitions. The February verdict became final.
• The ruling restored the pre-2017 requirement for parties to disclose donor identities above a set threshold.

4Chapter 4: Where the Money Went Next

Current Affairs

Electoral trusts

• With bonds gone, corporate donors have shifted heavily to electoral trusts.
• Trusts pre-date the ruling and survived it.
• Nine trusts disbursed ₹3,811 crore in FY2024-25, nearly triple the year before.
• The BJP received about 82% of that total. (Source: ADR.)
• Transparency improved, since trusts must disclose donors.
• But the concentration of political funding has not gone away. It has only moved channels.

What the disclosed data showed

• A 2025 peer-reviewed study looked at the top 30 electoral-bond donors.
• Fourteen bought bonds around the time they faced Enforcement Directorate or Income Tax action.
• In total, 26 donor companies faced some form of investigative-agency action. (Source: Humanities and Social Sciences Communications.)
• A February 2026 investigation found the same pattern reaching electoral trusts.
• The Tata Group donated $110.2 million weeks after roughly $15.2 billion in semiconductor project approvals in BJP-run states.
• The Murugappa Group donated after its own semiconductor facility got clearance. (Source: Al Jazeera.)
• These are findings from researchers and journalists, not court rulings.

5Chapter 5: What It Means

Great to Know

A scheme struck down years later

• The judgment shows the Supreme Court can strike down an entire funding mechanism years after its launch.
• It retroactively unsettled how parties had been financed since 2018.
• It reshapes how parties can legally raise funds.
• But the shift to electoral trusts, and the quid-pro-quo patterns researchers found, suggest the transparency question is still open.
• Read more: The Election Commission and Electoral Reforms, Political Parties in India, The Right to Information Act, 2005, Election Commission of India: Structure and Independence and Judicial Activism in India.

Quick Q&A

• Verdict date? 15 February 2024.
• Bench size? Five judges.
• Bonds encashed? ₹16,518 crore.
• Bonds sold by? SBI.
• Article used? 19(1)(a).