SC's electoral bonds scheme verdict: How BJP stands to lose the most?

Electoral bonds have accounted for ₹16,000 crore worth funds contributed to various political parties so far, a lion's share is estimated to have gone to BJP.

The Supreme Court, in a landmark judgment on Thursday, delivered a big setback to the Bharatiya Janata Party-led government and annulled the electoral bonds scheme for political funding, saying it violates the Constitutional right to freedom of speech and expression as well as the right to information. Since 2018, anonymous donors have contributed nearly ₹16,000 crore to political parties in India through electoral bonds.

For the BJP, electoral bonds represent over half of its total income.. (Pic for representation)

Analysing the period between 2018 and March 2022, the Association for Democratic Reforms (ADR), a non-governmental organisation, found that 57 per cent of these donations were directed towards the BJP. With India preparing for Lok Sabha elections between March and May, these funds have enabled the BJP to emerge as a dominant electoral force.

All political parties put together received over ₹12,000 crore till last fiscal since the introduction of the now-annulled electoral bond scheme in 2018, of which the ruling BJP got nearly 55 per cent or ₹6,565 crore, according to the data available with the Election Commission and ADR.

While the party-wise data for the current fiscal 2023-24 would be available later after they file annual audit reports for the year, the ADR put the collective amount of funds generated through the sale of electoral bonds between March 2018 and January 2024 at ₹16,518.11 crore, news agency PTI reported.

On average, electoral bonds are estimated to constitute more than half of the total contributions received by political parties, with some regional parties in power in their respective states relying on them for over 90 per cent of their funding.

For the BJP, electoral bonds represent over half of its total income. The BJP surpassed the Congress as the richest political party in India since the final year of UPA-II. In the fiscal year 2013-14, the BJP's total income was ₹673.8 crore, compared to the Congress's ₹598 crore.

Since then, the BJP's income has increased, while the Congress has seen a decline in its fortunes, except for intermittent years. In the fiscal year 2018-19, the first full fiscal year after the introduction of electoral bonds, the BJP's income over doubled to ₹2,410 crore (from ₹1,027 crore), while the Congress's income also rose significantly from ₹199 crore to ₹918 crore.

In the last fiscal year 2022-23, the BJP's total income was ₹2,360 crore, of which nearly ₹1,300 crore came from electoral bonds. During the same period, the Congress's total income decreased to ₹452 crore, with ₹171 crore coming from electoral bonds.

The BJP's electoral bond funding increased from ₹1,033 crore in 2021-22, while the Congress's funding decreased from ₹236 crore in the same year.

Among other parties, the Trinamool Congress received ₹325 crore through electoral bonds in the last fiscal year, while it was ₹529 crore for the Bahujan Samaj Party, ₹185 crore for the Dravida Munnetra Kazhagam, ₹152 crore for the Biju Janata Dal, and ₹34 crore for the Telugu Desam Party. The Samajwadi Party saw its electoral bond contributions fall to zero, while the Shiromani Akali Dal also received no contributions.

Nearly half of the funds in electoral bonds come from corporates, while the remainder comes from “other sources.”

What Raghuram Rajan said?

“Since the bond is issued by a public sector bank, an unprincipled government might get to know the list of donors and recipients,” former Reserve Bank of India governor and economist Raghuram Rajan wrote in an article for a daily last year. “Given the carrots and sticks at the government’s disposal, few individuals or corporations would chance donating large sums to the opposition through these bonds,” Rajan added.

According to retired Indian Navy commodore Lokesh Batra, who has been spearheading a campaign calling for greater transparency in electoral funding, “They might be called electoral bonds, but the rules don’t say that the money must be used only for elections.”

“So, whoever gets more money, the money can be used to buy up media space, boost advertising. Once you have the money, you can use it anywhere,” he said.

What are electoral bonds?

An electoral bond is a financial instrument for making donations to political parties as has been first pronounced by the then finance minister Arun Jaitley in the Union Budget 2017-18.

According to the Electoral Bond Scheme, 2018, an electoral bond is issued in the nature of a promissory note, which shall be bearer in character. A bearer instrument is one which does not carry the name of the buyer or payee, no ownership information is recorded and the holder of the instrument (i.e. political party) is presumed to be its owner, explains the ADR.

The scheme allows individuals – who are citizens of India – and domestic companies to donate these bonds — issued in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore — to political parties of their choice.

These bonds have to be redeemed by the political parties within 15 days. A person being an individual can buy bonds, either singly or jointly with other individuals.

No limit exists on the number of electoral bonds that a person (including corporate entities) can purchase. The amount of bonds not encashed within the validity period of 15 days shall be deposited by the authorised bank to the Prime Minister's National Relief Fund.