Why did the Supreme Court rule against the Electoral Bonds? : Explained in 15 mins

Summary

On February 15, 2024, the Supreme Court of India declared the anonymous electoral Bond scheme unconstitutional, sparking controversy around political funding. The court criticized the State Bank of India for not disclosing full data on electoral bonds, which were introduced to curb black money transactions but are now seen as a scam and a threat to democracy. The bonds allow for anonymous donations, leading to concerns about quid pro quo and foreign influence in elections. The court's ruling was based on the violation of citizens' right to information, the potential for corporate extortion, and the undermining of free and fair elections.

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Q & A

What was the Supreme Court's ruling on the Electoral Bond scheme in India on February 15, 2024?

The Supreme Court of India declared the anonymous Electoral Bond scheme unconstitutional, sparking a major controversy about political funding in the country.

What was the criticism against the State Bank of India (SBI) in relation to the Electoral Bonds?

The Supreme Court criticized SBI for not disclosing the full data regarding the Electoral Bonds, which included details of the donors and the parties that redeemed the bonds.

What are the primary concerns regarding the Electoral Bond scheme in India?

The primary concerns are that the scheme is considered a major scam in democratic India, potentially used as a legal instrument for extortion, and contributes to the circulation of black money, affecting the transparency of political funding.

How were Electoral Bonds introduced in India?

Electoral Bonds were introduced in the Union Budget of 2017-18 by then Finance Minister Arun Jaitley to curb black money transactions and provide a legitimate digital transaction for political funding.

What are the key attributes of Electoral Bonds?

Electoral Bonds can be purchased by any person or company, come in multiples of Rs 1,000, Rs 10,000, 1 lakh, and 1 crore, have no limit on purchase, can only be encashed by parties securing at least 1% votes in the previous election, and must be bought at authorized SBI branches with check or digital payment.

What was the reported total value of Electoral Bonds sold between 2018 and 2024?

A total of 28,30 electoral bonds worth Rs 16,51,8 crores were sold between 2018 and 2024.

Which political party was the top beneficiary of the Electoral Bonds according to the Association of Democratic Reforms?

The Bharatiya Janata Party (BJP) emerged as the top beneficiary, having encashed bonds worth Rs 6,60,005 crores between April 2019 and January 2024.

Why did the Supreme Court rule the Electoral Bond scheme unconstitutional?

The Supreme Court ruled against the scheme because it violated the right to information of Indian citizens, allowed for potential quid pro quo arrangements, and facilitated unlimited corporate donations that could hinder free and fair elections.

What is the concern regarding the influence of foreign companies on Indian elections through Electoral Bonds?

The concern is that Electoral Bonds make it easier for foreign companies to spend money in Indian elections and potentially influence the outcomes, which is considered a threat to India's democracy.

How does the Electoral Bond scheme affect smaller political parties and businesses?

Critics argue that the scheme favors bigger parties and corporations over smaller ones, potentially dominating Indian politics and undermining the influence of smaller players in the political landscape.

What is the role of the Enforcement Directorate (ED) in the context of Electoral Bonds and corporate donations?

The Enforcement Directorate (ED) has been involved in probing money laundering and other financial irregularities among companies that have purchased Electoral Bonds, raising questions about potential quid pro quo arrangements between these companies and political parties.

Outlines

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Keywords

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Highlights

On 15th February 2024, the Supreme Court declared the anonymous electoral Bond scheme unconstitutional.

The judgment sparked a major controversy about political funding in India.

The Supreme Court criticized the State Bank of India for not disclosing full data on electoral bonds.

Electoral bonds were introduced to curb black money transactions used for political donations.

The bonds were seen as both a safe instrument for political donation and a potential scam in democratic India.

Electoral bonds were introduced in the 2017 Union Budget by Finance Minister Arun Jaitley.

Businesses donating to political parties is a long-standing practice since 1947 in India.

Electoral bonds were designed to allow businesses to donate through a legitimate digital transaction.

The bonds work similarly to coupons or gift cards and can be purchased in multiples of specific rupee amounts.

Political parties that won at least 1% of the votes in the previous election could encash these bonds.

The Supreme Court ruled against electoral bonds for violating the right to information of Indian citizens.

The court also stated that donor privacy should not be used as a quid pro quo measure.

Unlimited corporate donations were seen as hindering free and fair elections, affecting democracy.

The BJP emerged as the top beneficiary of electoral bonds, with the highest share of donations.

Critics argue that some companies' donations were disproportionate to their share capital and revenue.

The Supreme Court's ruling suggests that electoral bonds could facilitate the channeling of black money into politics.

Electoral bonds could make it easier for foreign companies to influence Indian elections.

The case study highlights the complex relationship between business and politics in India.

The discussion aims to help viewers understand the ethical implications and the workings of electoral bonds.

Transcripts

hi everybody on 15th of February 2024

the Supreme Court passed a landmark

judgment and declared that the anonymous

electoral Bond scheme was

unconstitutional and this parked a major

controversy about the political funding

in India electoral bonds after all the

delays all the legal tussles and all the

political fights the data is out the

Supreme Court there slamming the SBI the

State Bank of India for not disclosing

uh the full data when it comes to the

Electoral bonds a five judge and crabbed

India's electoral bonds they have to

just submit the details of the donors

and the details of the parties which

redeemed the bonds on the other hand on

one side while the Electoral bonds are

considered to be a safe instrument of

political donation on the other side

this electoral Bond scheme is considered

to be the biggest scam in Democratic

India while on one side it is considered

to be an instrument to curve black money

transactions on the other side it is

considered to be a legal instrument of

extortion in India electoral Bond

extra so as usual let's break through

this chaos and understand step by step

what exactly are these electoral bonds

why were they introduced by the NDA

government and what exactly is there

disadv Advantage because of which it is

now considered to be a threat to the

Democracy of India so as usual we will

put out both sides of the argument so

that you can decide which side you want

to favor and by the way a kind request

to all the haters is that please watch

the video till the end and then drop a

comment because a lot of people make a

judgment with just the first half of the

video if this is clear to you let's get

started but before we move on I want to

quickly thank our partners of today's

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now people electoral Bonds were

introduced in the union budget of 2017

and 18 by our then Finance Minister Arun

jle electoral

bonds

so the first question we need to answer

is what exactly are these electoral

bonds and why were they introduced as we

all know India is known for its black

money transactions and this black money

was being used as an instrument by the

corporations to make political donations

now some people might call this donation

evil regardless of whether it is done in

black or white and today if I declare

that I am donating 10 lakh rupes to the

Amad party all the BJP supporters and

Congress supporters will start hating me

but the reality is that business and

political funding have always worked

hand inand so if they are legitimate

it's good if not then it is bad for

India but at the end of the day both

business and politics are two

interdependent pillars of the market I

repeat business business and politics

are two interdependent pillars of the

market and businesses donating money to

political parties is not a new thing at

all it has been happening since

1947 so the question is why do these

businesses donate money to the political

parties and does it mean that they get

unfair favors well let me explain let's

say you are a solar panel manufacturer

and you import your raw materials from

China and the current government has

imposed an import duty of 100% such that

the cost of your panel is shooting up

from $100 to

$200 and because of this cost shoot up

you are not able to compete with your

European competitor who is able to sell

the same panels at $150 but now if

Congress comes up and declares that they

will slash the import Duty on the

Chinese imported raw materials for solar

panels what does it mean it means that

if Congress comes to power then your

cost of solar panels will drop from $200

to $100 per panel so if this comes true

you can beat your European competitors

and you can make hundreds of crores by

selling panels to Europe so in this case

my question to you is what would you do

you will obviously donate to Congress so

that Congress can come to power remove

the import Duty and you could sell

hundreds of crores worth of products to

Europe right but the problem over here

is that if you donate money to political

parties openly then your Indian bjb

customers might start boycotting you or

sometimes a local politician might come

and threaten you and even worse if

you're a public listed company then

you're stocks will come crashing down so

now the question is in this given

scenario will you stop donating to

congress not at all you will still

donate to Congress it's just that you

will now make a donation in cash so that

nobody knows that you donated and still

your favorite party could win and when

hundreds of such companies fund their

favorite political party with thousands

of crores of donation in untraceable

cash black money is circulated and

eventually the Indian economy gets

affected

so there are three disadvantages to

openly admitting to political donations

number one the reputation of the donors

is which leads to loss in brand value

number two it might also lead to stock

dumping and the deterioration of

investors confidence and lastly because

of these consequences black money gets

circulated in the form of cash for

political funding so in the union budget

of 201718 electoral Bonds were

introduced to make sure that political

parties can get funding from businesses

through a legitimate digital transaction

and at the same time the companies only

have to declare that they have bought

electoral bonds without the need to

reveal which party they donated to the

way these bonds work is very similar to

our coupons or gift cards and they have

five major attributes firstly any person

or company can buy these bonds secondly

these bonds are issued in multiples of

th000 10,000 1 lakh and 1 CR rupes

thirdly there is no limit as to how many

of these bonds can be bought number four

only those parties which have secured a

minimum of 1% votes in the previous

election can encash these bonds and last

these bonds could be bought only at

authorized SBI branches with check or

digital payment only so you cannot buy

these bonds with cash so if I bought a

bond worth 1 CR Rupees to donate to

Congress then Congress can use the bond

like a coupon and redeem 1 CR rupees

from the bank within 15 days and if they

don't redeem it this money will get

transferred to the PM Relief Fund and

this money could be used by the Congress

for their campaigns this is how

electoral bonds work if this is clear to

let's come to the present scenario as

per a report by the Association of

democratic reforms a total of 28,30

electoral bonds worth

16,5 18 crores were sold between 2018

and 2024 and when we dug deeper into the

papers that have been released by The

SBI we understood the following things

firstly the bhartia janata party or the

BJP they have emerged as the top

beneficiary of electoral bonds wherein

they have encashed bonds worth 6,60

point 5 crores between April 2019 and

January

2024 this amount is the highest among

all political parties and BJP alone has

a total share of

47.5% of the donations similarly TMC

secured the second spot with

1,695 CR rupees and Congress got 1,

14219 CR rupees so now the question over

here is if these Bonds were curbing the

circulation of black money and still

gave a legitimate instrument to the

corporates for donation then why did the

Supreme Court call them

unconstitutional well the Supreme Court

ruled against this law for three main

reasons firstly it went against the

right to information of Indian citizens

secondly it said that the donor privacy

should not be made as a quidd pro Co

measure don't worry about it I'll

explain it in sometime and lastly it

said that unlimited corporate donations

violate free and fair elections and

hence it hinders the very thread of our

democracy so now let's understand each

of these reasons elaborately the first

reason is pretty straightforward where

the court said that the Electoral bonds

went against the right to information of

Indian citizens so in short if an

important piece of information like this

large scale donation to a political

party is kept away from the citizens it

is against the right to Information Act

if this is clear to you let's come to

the second reason to understand the

second reason we first need to

understand what is quidd proo quid proo

is a Latin phrase which means something

for something in this case the theory is

that electoral bonds could be used to

get unfair favors for example if pran's

company gets rated by the enforcement

directorate for moneya laundering then

the theory says that the political party

in power could blackmail prii to make

her donate 10 CR rupees using the

Electoral Bond and in exchange for this

donation they will let panry go so this

way a political party could use

extortion to get funding from businesses

this is the reason why in Twitter you

must have seen a lot of people make

connections between the Ed rates and the

donations made by these companies for

example at least 14 out of the top 30

companies which purchased electoral

bonds from 2019 to 2024 they faced an

action by the Central and state probe

agencies now mind you we cannot prove

whether the Ed rates and the purchase of

bonds are interdependent or not because

there could be two possible scenarios

in the first scenario the money could be

given before the Ed rate for example

vanta bought bonds between 2019 and 2022

but the Ed rates probing money

laundering in vidanta happened in 2022

and in the second scenario the money

could be given after the Ed rates for

example Ed began a money laundering

probe against future gaming in 2022 on

assets worth 49.92 crores and just 5

days after that future gaming bought 100

crores in electoral bonds and just these

two companies are amongst the top five

buyers of electoral bonds similarly the

fourth largest buyer of electoral bonds

is halia energy and they had been booked

by the CBI in 2020 in a case of alleged

corruption then we understood that halia

energy purchased bonds worth 377 crores

between 2019 and 2024 and just like this

there's a long list of 10 odd companies

the list of which I will give you in the

description so you can check it out and

then you can make a judgment but the

fact over here that we need to

understand is that there is no Clarity

on three things whether the Ed let them

go because they donated money or the Ed

let them go because they were not guilty

or the Ed has not let them go at all so

until now these two events that is the

companies donating via electoral Bond

and Ed raid these two are isolated

events and until the high court or the

Supreme Court makes a judgment we cannot

draw a correlation between these events

even though the theory of making these

connections sounds very very interesting

but at the end of the day if you ask me

is this quid pro Co Arrangement possible

absolutely yes and lastly critics point

out that there are some companies whose

total share capital and revenue are just

too low for the amount of donations that

they have made for example quid supply

chain private limited was the third

largest buyer of electoral bonds at 410

CR rupees between fi 22 and fi 24 now

this is a private company that was

created in the year 2000 with a share

capital of 13.99 crores and paid up

capital capital of 129.99 cror that's

261 cror in total and in F22 its net

profit was only 21.72 crores with a

revenue of over 500 crores in fi23 so

critics point out that for this company

to have bought electoral bonds worth 360

crores in a single Financial year of

fy22 it does not look practical and it

makes more sense if this company has a

backing from some large company and when

we look deeper we found that according

to Hindu business line quck is a

manufacturer of warehouses and storage

units and this company has links to

Reliance Industries but Reliance has

come out very clearly and clarified that

it is not a subsidiary of any Reliance

entity and here's where the facts get

hazy so we don't know anything beyond

this point if this is very very clear to

you let's come to the third reason which

says that unlimited corporate donations

violate free and fair elections so let's

understand this better you see before

2017 the companies could contribute 7.5

% of their average net profit over the

past 3 years but after electoral bonds

since companies could donate unlimited

amounts of money with anonymity it

opened up the possibility of shell

companies which could be used only to

rotate funds so it is said that these

electoral bonds could be used to channel

undocumented black money into the

political and electoral process of India

now the counterargument to this is that

if the government bans anonymity then

companies can still give cash right and

they can still fund political parties

and still ask for favors right well

unfortunately our system is not

foolproof enough to prevent cash

entirely it's just that with electoral

bonds it just becomes a little easier to

donate large amounts of money in

exchange for favors thirdly electoral

bonds make it easier for foreign

companies to spend money in Indian

elections and influence our elections

and again back when cash was used it

became difficult to transfer large

amounts of money but through electoral

bonds it was is possible to transfer a

lot of money and then influence the

elections so if this information is kept

away from the public then there is a

very high possibility that a rich

country might just pour in billions of

dollars and influence the elections in

India and this is considered to be a

threat to our democracy and again while

this influence is still possible through

a complex mechanism it's just a tad bit

more difficult and lastly critics also

point out that big parties and big

corporations together can dominate

Indian Politics as opposed to small

parties and small businessmen so in a

way it is evidently favoring bigger

Powers over smaller ones but if you ask

me my humble opinion is that no matter

which field or domain you pick the

bigger players no matter what will

always have an upper hand over the

smaller players whether that is YouTube

politics or business this is what we

could make out from why the Supreme

Court ruled against the Electoral bonds

so as usual now you can decide what is

ethical and what is not and who is right

and who is wrong but I just hope you

learn something valuable about business

and politics from this case study that's

all from my side for today guys if you

learn something valuable please make

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thank you so much for watching I will

see you in the next one

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bye-bye