Central Idea

The Supreme Court expressed concerns about the selective confidentiality of the electoral bonds scheme, which allows the ruling party to discover the identities of donors to opposition parties.
The court questioned the government’s presumption of confidentiality and explored the potential disadvantages faced by opposition parties in the electoral process.

About Electoral Bond Scheme

Definition	Banking instruments for political party donations with donor anonymity.
Purchase Method	Available to Indian citizens and Indian-incorporated companies from select State Bank of India branches. Can be bought digitally or via cheque.
Donation Process	Purchasers can donate these bonds to eligible political parties of their choice.
Denominations	Available in multiples of ₹1,000, ₹10,000, ₹10 lakh, and ₹1 crore.
KYC Requirements	Purchasers must fulfill existing KYC norms and pay from a bank account.
Lifespan of Bonds	Bonds have a 15-day life to prevent them from becoming a parallel currency.
Identity Disclosure	Donors contributing less than ₹20,000 need not provide identity details like PAN.
Redemption	Electoral Bonds can be encashed only by eligible political parties through an Authorized Bank.
Eligibility of Parties	Only parties meeting specific criteria, including securing at least 1% of votes in the last General Election, can receive Electoral Bonds.
Restrictions Lifted	Foreign and Indian companies can now donate without disclosing contributions as per the Companies Act.
Objective	To enhance transparency in political funding and ensure funds collected by political parties are accounted or clean money.

Justice Khanna’s Address: The Judge pointed out that the ruling party had easier access to information about contributions to opposition parties, creating an imbalance in transparency.
State Bank of India’s Role: CJI Chandrachud questioned whether the SBI, through which electoral bonds were purchased, had a statutory obligation to maintain confidentiality.

Confidentiality Key: The solicitor-General argued that confidentiality regarding donor identities and contributions was crucial to the electoral bonds scheme. He contended that eliminating the scheme would revert the country to a period when political donations were made in unaccounted cash, leading to black money circulation.
Economic Impact: He emphasized that the scheme aimed to channel clean money into the electoral system, reducing the influence of black money. He referred to a report highlighting the increase in income from unknown sources to political parties and the discovery of shell companies during the previous donation regime.

Information Blackhole: The CJI noted that while the scheme aimed to bring white money into the electoral process, it introduced opacity, creating an “information blackhole.” He emphasized the need for proportionality in achieving the scheme’s objectives.
Expectations of Donors: Chandrachud questioned how substantial donations were consistently made to the ruling party, implying certain expectations from donors.
Donations Not Charity: Solicitor-General Mehta clarified that donors were primarily motivated by their own interests, often related to business or market-driven factors. He argued that larger donations to a party did not necessarily indicate an issue with the scheme.
Right to Privacy: Mehta argued that revealing the political affiliations of donors would infringe on their right to privacy.

Justice Khanna’s Query: Justice Khanna raised concerns about how confidentiality in the electoral bonds scheme could prevent quid pro quo arrangements between political parties and donors.
Proxy Donations: The judge questioned the possibility of parties funneling unaccounted money back into the system through proxy political donations.

The Supreme Court’s scrutiny of the electoral bonds scheme centers on issues of transparency, confidentiality, and potential imbalances in the electoral process.
The court’s questions and concerns highlight the importance of ensuring fairness and proportionality in political funding mechanisms.