Published on: 03rd October 2025
Authored By: Prithviraj Abrol
VIPS-TC
Abstract
This article analyzes the Supreme Court’s landmark 2024 decision striking down India’s Electoral Bond Scheme as unconstitutional. The five-judge Constitution Bench held that the scheme, which permitted anonymous political donations through bearer bonds, violated the fundamental rights to freedom of speech and expression (Article 19(1)(a)) and equality (Article 14). Through comprehensive examination of the judgment’s constitutional reasoning, comparative analysis with international political finance regimes, and assessment of implications for Indian democracy, this study demonstrates how the decision reaffirmed transparency and accountability as essential pillars of democratic governance. The article argues that while the judgment represents significant progress in electoral reform, comprehensive implementation mechanisms remain necessary to achieve meaningful transparency in political funding.
1. Introduction
The Supreme Court’s decision in Association for Democratic Reforms v. Union of India (2024) represents a watershed moment in Indian constitutional jurisprudence, reaffirming that transparency in political funding constitutes a fundamental prerequisite for democratic governance. The case challenged the Electoral Bond Scheme (EBS), a controversial mechanism introduced through the Finance Act, 2017, that permitted anonymous political donations through bearer bonds purchasable from the State Bank of India.
The scheme emerged against a backdrop of long-standing concerns about opaque political financing in India. By amending the Representation of the People Act, 1951, the Income Tax Act, 1961, and the Companies Act, 2013, the government created a system ostensibly designed to formalize political donations and reduce cash transactions. However, the scheme’s core feature—donor anonymity—sparked intense debate about whether it enhanced or undermined democratic accountability.
The Supreme Court’s unanimous verdict by a five-judge Constitution Bench found that the Electoral Bond Scheme violated constitutional principles enshrined in Articles 19(1)(a) and 14. The judgment emphasized that voters’ right to information about political funding constitutes an essential component of informed electoral participation and that the scheme created unconstitutional information asymmetries favoring the incumbent government.
This analysis examines the factual background, legal issues, judicial reasoning, and broader implications of the decision. By situating the judgment within India’s evolving electoral law jurisprudence and comparing it with international political finance frameworks, this article assesses the decision’s significance for democratic governance and electoral reform.
2. Background: Electoral Funding in India
2.1 Historical Context of Political Finance Regulation
Since independence, political funding in India has been characterized by significant opacity. The Representation of the People Act, 1951, while establishing certain disclosure requirements, failed to prevent proliferation of unaccounted donations and undisclosed funding channels. Political parties historically relied on informal contribution networks that obscured donor identities and facilitated corruption.
Judicial intervention began addressing these deficiencies in the early 2000s. In Union of India v. Association for Democratic Reforms (2002), the Supreme Court affirmed voters’ rights to information about candidates’ backgrounds. People’s Union for Civil Liberties (PUCL) v. Union of India (2003) extended this principle to financial disclosures, establishing that transparency in political funding constitutes a fundamental aspect of informed electoral choice.
Despite these judicial pronouncements, significant portions of political funding remained undisclosed. Analysis by the Association for Democratic Reforms indicated that substantial political funding came from unidentified sources, raising concerns about accountability and the influence of vested interests on democratic processes.
2.2 Introduction of the Electoral Bond Scheme
In 2017, the government introduced the Electoral Bond Scheme as an alternative to conventional donation channels. The scheme permitted eligible donors—individuals and corporations—to purchase bearer bonds from the State Bank of India and donate them to registered political parties under Section 29A of the Representation of the People Act.
Key legislative amendments included:
Representation of the People Act, 1951: Removing requirements for political parties to disclose donor identities for contributions made via electoral bonds.
Companies Act, 2013: Eliminating the seven percent cap on corporate donations to political parties and removing the requirement that companies be profitable for three years before making political donations.
Income Tax Act, 1961: Ensuring that donations through electoral bonds did not require public disclosure in tax filings and reducing reporting thresholds.
Foreign Contribution (Regulation) Act, 2010: Amendments that potentially opened avenues for foreign funding of Indian political parties through domestic subsidiaries.
Significantly, these amendments were passed through the Finance Act, 2017, classified as a Money Bill under Article 110 of the Constitution. This classification allowed the government to bypass Rajya Sabha scrutiny, as Money Bills require only Lok Sabha approval, raising concerns about circumvention of parliamentary checks and balances.
The government defended the scheme as a mechanism to formalize political donations, reduce cash transactions, and curb black money in politics. However, critics argued that the anonymity provisions undermined transparency while the procedural mechanism eroded constitutional safeguards.
3. Facts of the Case
3.1 Petitioners and Their Contentions
The challenge to the Electoral Bond Scheme was initiated through writ petitions filed under Article 32 of the Constitution by the Association for Democratic Reforms (ADR), Common Cause, and other civil society organizations concerned with electoral transparency and democratic accountability.
The petitioners advanced several key arguments:
Violation of Voters’ Right to Information: The scheme deprived citizens of essential information about financial influences shaping political discourse, thereby impairing informed electoral choice protected under Article 19(1)(a).
Information Asymmetry and Inequality: The ruling party gained disproportionate advantage through access to donor information maintained by the state-controlled State Bank of India, violating Article 14’s equality guarantee.
Facilitation of Corporate Influence: Removing corporate donation caps and profitability requirements enabled unprecedented corporate influence over political processes, potentially fostering crony capitalism.
Circumvention of Parliamentary Process: Enacting these fundamental changes through a Money Bill bypassed Rajya Sabha scrutiny, undermining constitutional checks and balances.
Threat to Electoral Integrity: The opacity inherent in the scheme threatened free and fair elections, potentially affecting the Constitution’s basic structure.
3.2 Respondents’ Defense
The Union of India defended the Electoral Bond Scheme on multiple grounds:
Formalization of Political Finance: The scheme channeled political donations through formal banking systems, reducing reliance on unaccounted cash transactions.
Protection Against Victimization: Donor anonymity protected contributors from political vindictiveness and harassment by opposing parties or governments.
Improved Transparency: The scheme represented improvement over completely opaque cash donations, as the government could track transactions through SBI records for investigative purposes.
Legislative Competence: The parliamentary process followed was constitutionally valid and within the legislature’s competence to regulate political finance.
Practical Necessity: Complete transparency might discourage legitimate donations, forcing political funding back into informal channels.
3.3 Election Commission’s Position
The Election Commission of India, while acknowledging the scheme’s potential drawbacks, adopted a cautious position. In its affidavit, the Commission expressed concerns that anonymity could undermine public trust in electoral processes while recognizing the government’s policy objectives. However, the Commission deferred ultimate constitutional determination to the judiciary, maintaining institutional neutrality while highlighting transparency concerns.
4. Legal Issues before the Court
The Supreme Court identified several fundamental constitutional questions:
Article 19(1)(a) – Right to Information: Whether freedom of speech and expression encompasses voters’ right to know about political funding sources, and whether the scheme’s anonymity provisions infringe this right.
Article 14 – Equality: Whether asymmetric access to donor information, privileging the incumbent government through SBI records, violates equality principles.
Free and Fair Elections: Whether the opaque funding mechanism undermines free and fair elections as part of the Constitution’s basic structure.
Article 110 – Money Bill Procedure: Whether amendments to non-financial legislation through a Money Bill classification were constitutionally valid.
Proportionality: Whether the scheme’s objectives could be achieved through less restrictive means that preserved greater transparency.
These issues required the Court to balance competing interests: the government’s legitimate interest in formalizing political finance against citizens’ fundamental right to information necessary for informed democratic participation.
5. Judicial Reasoning and Decision
On 15 February 2024, the five-judge Constitution Bench comprising Chief Justice D.Y. Chandrachud and Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra delivered a unanimous judgment striking down the Electoral Bond Scheme.
5.1 Article 19(1)(a): The Right to Information
The Court reaffirmed that freedom of speech and expression under Article 19(1)(a) necessarily includes the right to receive information essential for democratic participation. Drawing upon precedents including State of Uttar Pradesh v. Raj Narain (1975) and PUCL v. Union of India (2003), the Court emphasized that transparency in political funding enables voters to exercise informed electoral choice.
Chief Justice Chandrachud observed that in a functioning democracy, citizens must be able to scrutinize the financial sources supporting political parties. Depriving voters of this information fundamentally undermines informed electoral participation, which constitutes the cornerstone of democratic governance.
The Court held that the Electoral Bond Scheme’s anonymity provisions essentially eliminated citizens’ ability to assess financial influences on political parties, thereby violating the right to information protected under Article 19(1)(a). The judgment emphasized that this right is not merely aspirational but constitutes a fundamental prerequisite for meaningful democracy.
5.2 Article 14: Equality and Information Asymmetry
Regarding Article 14, the Court found that the Electoral Bond Scheme created unconstitutional inequality by providing the government—and by extension, the ruling party—exclusive access to donor information through State Bank of India records.
Justice Khanna’s analysis emphasized that any policy creating asymmetrical information flows regarding critical democratic processes violates equality principles. The scheme systematically advantaged the incumbent party through access to comprehensive donor data while opposition parties remained ignorant of their own supporters’ contributions and competitors’ funding sources.
This information asymmetry affected multiple dimensions of electoral competition:
Strategic Advantages: The ruling party could target donor solicitation more effectively with knowledge of contribution patterns.
Potential Coercion: Government access to donor identities created opportunities for rewarding supporters and pressuring opposition funders.
Unequal Accountability: While all parties benefited from anonymity, only the incumbent faced no opacity regarding funding sources.
The Court concluded that this structural advantage violated Article 14’s guarantee of equality before law, as it arbitrarily differentiated between political actors based on their relationship with state institutions rather than relevant merit-based criteria.
5.3 Free and Fair Elections and Basic Structure
Beyond specific rights violations, the Court assessed the scheme against the basic structure doctrine established in Kesavananda Bharati v. State of Kerala (1973). Free and fair elections constitute an essential component of the Constitution’s basic structure, requiring not merely procedural regularity but substantive conditions enabling informed electoral choice.
Referencing Indira Nehru Gandhi v. Raj Narain (1975), the Court emphasized that electoral integrity requires transparency allowing voters to make decisions based on complete information. The Electoral Bond Scheme, by concealing funding sources, inherently undermined electoral fairness by preventing voters from assessing whether political parties might be unduly influenced by specific economic interests.
Chief Justice Chandrachud stressed that democracy requires elections conducted on foundations of fairness and transparency. Systems that conceal the provenance of political funds inevitably enable abuse and corruption, eroding the sanctity of electoral competition and threatening democratic governance itself.
5.4 Procedural Concerns: Money Bill Classification
While the substantive constitutional violations provided sufficient grounds for striking down the scheme, the Court also addressed procedural concerns regarding its enactment through a Money Bill.
Article 110 restricts Money Bills to legislation dealing exclusively with specified financial matters including taxation, government borrowing, and Consolidated Fund operations. The amendments to the Representation of the People Act, Companies Act, and other statutes significantly affected political rights and electoral processes beyond purely financial matters.
Citing Rojer Mathew v. South Indian Bank Ltd. (2019), the Court noted that Money Bill misclassification undermines Rajya Sabha’s constitutional role and disrupts parliamentary checks and balances. While this procedural defect reinforced the Court’s conclusions, the primary basis for invalidating the scheme rested on substantive constitutional violations.
6. Comparative International Perspectives
6.1 United States Framework
The United States presents an instructive comparative example. While Citizens United v. Federal Election Commission(2010) removed certain spending limitations based on First Amendment grounds, it maintained strict disclosure requirements. The Federal Election Commission requires detailed reporting of contributions above specified thresholds, ensuring transparency while permitting robust political spending.
American law distinguishes between contribution limits (which may be regulated) and expenditure restrictions (which face stricter scrutiny), but emphasizes disclosure as essential for democratic accountability. This framework demonstrates that transparency and robust political participation are complementary rather than contradictory objectives.
6.2 United Kingdom Model
The United Kingdom’s Political Parties, Elections and Referendums Act 2000 establishes comprehensive disclosure requirements for donations exceeding £7,500. The Electoral Commission oversees reporting and maintains public databases of political contributions, enabling citizen scrutiny while protecting against undue influence.
British law prohibits anonymous donations above minimal thresholds and requires detailed quarterly reporting by political parties. This framework successfully balances donor privacy for small contributions against transparency requirements for significant funding sources.
6.3 German Approach
Germany’s Political Parties Act mandates full disclosure for contributions above minimal thresholds and explicitly prohibits anonymous political donations above €500. German constitutional jurisprudence views political finance transparency as essential for democratic legitimacy, requiring that citizens understand financial networks underpinning political activities.
The German Constitutional Court has repeatedly emphasized that while parties enjoy associational freedoms, these rights must be balanced against citizens’ rights to information about political funding sources. This constitutional framework prioritizes transparency as a democratic necessity rather than treating it as merely desirable.
6.4 Comparative Lessons
These international examples demonstrate that mature democracies prioritize political finance transparency as fundamental to democratic governance. While specific thresholds and mechanisms vary, the underlying principle remains consistent: citizens must be able to assess financial influences on political actors to make informed electoral choices.
India’s Electoral Bond Scheme, by institutionalizing anonymity, deviated fundamentally from these international norms. The Supreme Court’s decision brings Indian electoral law into closer alignment with global democratic standards emphasizing transparency and accountability.
7. Implications for Indian Democracy
7.1 Immediate Consequences
The judgment’s immediate effects included:
Disclosure Requirements: Political parties were required to disclose information about electoral bond donations received since the scheme’s inception, providing retrospective transparency.
Funding Adjustments: Parties dependent on large anonymous donations faced immediate funding uncertainties, requiring adaptation to more transparent financing models.
Public Awareness: The extensive media coverage and detailed judgment enhanced public understanding of political finance issues, potentially increasing citizen engagement with electoral transparency.
Data Release: The State Bank of India was ordered to provide comprehensive data on electoral bond purchases and redemptions to the Election Commission, enabling public scrutiny of historical funding patterns.
7.2 Long-Term Reform Implications
The decision catalyzed broader discussions about comprehensive electoral reform:
State Funding Proposals: Renewed consideration of partial or complete state funding of elections to reduce dependence on private donations and their associated corruption risks.
Regulatory Strengthening: Calls for establishing independent political finance authorities with investigative and enforcement powers separate from politically accountable institutions.
Real-Time Disclosure: Proposals for technology-enabled real-time contribution tracking systems allowing continuous public monitoring of political funding.
Comprehensive Legislation: Recognition of the need for holistic political finance legislation addressing contribution limits, disclosure requirements, enforcement mechanisms, and penalties in a unified framework.
7.3 Institutional Impacts
The judgment affects multiple institutions:
Election Commission: Enhanced responsibilities for monitoring political finance compliance and maintaining public disclosure databases.
Political Parties: Necessity to develop transparent fundraising mechanisms and internal compliance systems.
Donors: Greater accountability for political contributions while protection against harassment through appropriate legal safeguards.
Judiciary: Continued role in interpreting and enforcing electoral transparency requirements through constitutional litigation.
8. Challenges and Future Considerations
8.1 Implementation Concerns
Effective implementation of the judgment’s principles faces several challenges:
Enforcement Capacity: Existing electoral and administrative institutions may lack resources and expertise for comprehensive political finance monitoring.
Cash Economy Risk: Stringent disclosure requirements might push donations back toward unaccounted cash transactions, defeating transparency objectives.
Compliance Culture: Developing organizational cultures within political parties that prioritize transparency over expedient fundraising methods.
Technological Infrastructure: Creating and maintaining digital systems for real-time disclosure and public access to political finance data.
8.2 Balancing Competing Interests
Future reforms must balance multiple objectives:
Privacy vs. Transparency: Protecting legitimate donor privacy interests while ensuring sufficient disclosure for democratic accountability.
Small vs. Large Donations: Establishing appropriate thresholds that require disclosure for significant contributions without burdening small donors with excessive reporting.
Party Autonomy vs. Regulation: Respecting political parties’ associational freedoms while imposing necessary transparency and accountability requirements.
Operational Flexibility vs. Accountability: Allowing parties to function effectively while preventing exploitation of regulatory gaps.
8.3 Comprehensive Reform Agenda
Achieving meaningful political finance transparency requires:
Legislative Action: Enacting comprehensive political finance legislation addressing donations, expenditures, disclosure, and enforcement in an integrated framework.
Institutional Development: Strengthening Election Commission capacity and potentially creating specialized political finance oversight bodies.
Technological Solutions: Implementing digital disclosure platforms enabling real-time reporting and public access to contribution data.
Public Engagement: Enhancing citizen awareness and engagement with political finance issues through education and accessible information systems.
International Cooperation: Learning from international best practices while adapting frameworks to Indian constitutional and political contexts.
9. Conclusion
The Supreme Court’s decision in Association for Democratic Reforms v. Union of India (2024) represents a defining moment for Indian constitutional democracy, reaffirming that transparency and accountability constitute non-negotiable pillars of electoral integrity. By striking down the Electoral Bond Scheme, the Court sent an unequivocal message that democratic participation requires informed citizens with access to essential information about political funding sources.
The judgment’s constitutional analysis reinforces several fundamental principles: that Article 19(1)(a)’s freedom of speech necessarily encompasses the right to information about political finance; that Article 14 prohibits information asymmetries systematically advantaging incumbent governments; and that free and fair elections require substantive transparency rather than merely procedural regularity.
While the decision addresses the immediate problem of anonymous political donations, its significance extends far beyond the specific scheme challenged. The judgment catalyzes broader conversations about comprehensive electoral reform, potentially inspiring legislative action on state funding, regulatory strengthening, and real-time disclosure mechanisms.
However, translating the judgment’s principles into effective practice requires sustained commitment from multiple stakeholders. Political parties must embrace transparency cultures; the Election Commission requires enhanced capacity and resources; the legislature must enact comprehensive political finance legislation; and civil society must maintain vigilance in monitoring compliance and advocating for accountability.
The international comparative analysis demonstrates that Indian democracy now aligns more closely with global standards emphasizing political finance transparency. Yet implementation challenges remain significant, particularly regarding enforcement capacity, technological infrastructure, and compliance culture development.
Ultimately, this judgment affirms that Indian constitutional democracy rests not merely on periodic elections but on informed participation enabled by access to essential information. The right to know about political funding sources is not a peripheral concern but rather a fundamental prerequisite for meaningful democratic governance. As India continues developing its electoral law framework, this decision will stand as a landmark affirmation that transparency and accountability are not negotiable in constitutional democracies but rather essential conditions for their survival and flourishing.
References
- Association for Democratic Reforms v. Union of India, Writ Petition (Civil) No. 880 of 2017 (Supreme Court of India, 2024)
- Union of India v. Association for Democratic Reforms, (2002) 5 SCC 294
- People’s Union for Civil Liberties v. Union of India, (2003) 4 SCC 399
- State of Uttar Pradesh v. Raj Narain, AIR 1975 SC 865
- Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225
- Indira Nehru Gandhi v. Raj Narain, AIR 1975 SC 2299
- Rojer Mathew v. South Indian Bank Ltd., (2020) 6 SCC 1
- Finance Act, 2017 (India)
- Representation of the People Act, 1951
- Companies Act, 2013
- Income Tax Act, 1961
- Association for Democratic Reforms, National Election Watch Reports (various years)
- Election Commission of India, Affidavit in Writ Petition (Civil) No. 880 of 2017
- Political Parties, Elections and Referendums Act 2000 (United Kingdom)
- Citizens United v. Federal Election Commission, 558 U.S. 310 (2010)
- Politische Parteiengesetz [Political Parties Act] (Germany)
- Transparency International India, Political Finance in India: Issues and Challenges (2023)
- Jain, M.P., Indian Constitutional Law (8th ed., 2018)
- Basu, D.D., Commentary on the Constitution of India (11th ed., 2019)
