The 2017 introduction of the Electoral Bond Scheme in India sought to transform political financing by permitting anonymous contributions to political parties using interest-free bearer securities called electoral bonds.

These bonds, which were overseen by the State Bank of India (SBI), were available for purchase by Indian individuals and institutions with the goal of improving accountability and transparency in political contributions.

However, the plan was heavily criticized for having the ability to hide the sources of political finance, which resulted in a historic 2024 Supreme Court decision declaring it unlawful.

How do Electoral Bonds Work?

• Financial tools called Electoral Bonds allow people to provide money to political parties in secret.
• The administration unveiled the scheme on January 2, 2018, calling it an alternative to cash contributions made to political parties, as part of efforts to improve political funding transparency.
• Any individual, company, association, or corporation that is an Indian citizen or that was established in India may acquire electoral bonds. It's a document that resembles a bearer bond or promissory note. The bonds are specifically designed to make it possible to donate money to political parties.
• Since the donor's name and other information are not included on the bond, electoral bonds are regarded as anonymous. Furthermore, since there is no cap, any number of bonds may be purchased.
   

Legal Structure and Procedure:

• Included in the Union Budget 2017-18 and introduced under the Finance Act of 2017.
• To make it easier to introduce Electoral Bonds, changes were made to a number of laws, including the Companies Act of 2013, the Income Tax Act of 1961, and the Representation of the People Act of 1951.
  ₹1,000, ₹10,000, ₹1,00,000, ₹10,000,000, and ₹1,00,00000 are the available denominations.
• can be bought by any Indian national or company that is formed there, provided they meet KYC requirements and pay using money from a bank account.
• Issued and cashed only through particular State Bank of India (SBI) branches.

Valid for donations to political parties registered under Section 29A of the Representation of the People Act, 1951, and obtaining at least one percent of the total votes cast in the most recent general election, for a period of fifteen days from the date of issuance.

Debate and the Supreme Court's Decision:

Supreme Court says, the Electoral Bonds Scheme violates the right to information and freedom of speech and expression under Article 19(1)(a) of the Constitution. It can lead to quid pro quo. Donor anonymity was offered via the electoral bonds program, although it was criticized for adding opacity to the political fundraising process. On 15 February 2024, a five-judge bench of the Supreme Court of India, headed by Chief Justice DY Chandrachud, unanimously struck down the electoral bonds scheme, as well as amendments to the Representation of People Act, Companies Act and Income Tax Act, as unconstitutional.
The Supreme Court ruled that it was unconstitutional due to its disproportionate restriction on voters' fundamental right to know where political parties receive their funding, information that is necessary for voters to exercise their right to vote.

In conclusion, despite the Electoral Bond Scheme's intention to revolutionize political financing, its failure stemmed from possible abuse and a lack of transparency. The question of how to reconcile political donor responsibility with anonymity is still up for debate.