Electoral Funding After the Bonds Judgment and the Reform India Still Needs

When the Supreme Court struck down the electoral bonds scheme in February 2024, in a unanimous verdict delivered by a five-judge bench led by then Chief Justice D.Y. Chandrachud, the immediate coverage focused heavily on the specific corporate donors whose names emerged once State Bank of India was compelled to disclose the purchase and redemption data. That disclosure was genuinely significant, and it is worth taking a moment to register what it actually confirmed before turning to what it left unresolved. But treating the judgment as having solved India's electoral funding problem mistakes the removal of one particular opacity mechanism for a comprehensive fix to a system with several distinct and largely untouched defects.

What the bonds scheme actually was and why it was struck down

The electoral bonds scheme, introduced in the 2017 Finance Bill and implemented from 2018, allowed individuals and companies to purchase interest-free bonds from the State Bank of India and donate them to political parties without either the donor's identity or the donation amount being disclosed publicly, though the bank itself retained records that could, in principle, be accessed by government agencies. The Court's judgment found this asymmetric transparency structure — anonymous to the public and the opposition but potentially visible to the ruling government through its control of the SBI and enforcement agencies — to be a violation of voters' right to information under Article 19(1)(a), and further found the scheme's removal of previous caps on corporate donations to be constitutionally unsustainable given the risk it created of quid pro quo arrangements between large donors and the party in power. The reasoning was significant not merely for striking down one scheme but for reaffirming that transparency in political funding is a component of the constitutional right to information rather than a matter left entirely to legislative discretion.

What the disclosed data actually showed

Once the data was published, several patterns emerged that had long been suspected but not previously documented with this precision. The BJP received a substantially larger share of total bond proceeds than any other party, consistent with its position as the ruling party at the Centre for the scheme's entire duration, though several regional parties, including the Trinamool Congress and the Bharat Rashtra Samithi, also received disclosed sums that drew scrutiny given those parties' concurrent state-level regulatory relationships with some donor companies. A number of donor companies had purchased bonds shortly before or after receiving government contracts, regulatory approvals, or, in some cases, while under investigation by central agencies, correlations that several investigative journalists and opposition politicians argued suggested a pay-to-play dynamic, though establishing direct causation in any individual instance would require investigation beyond what the disclosed data alone can demonstrate. The data's honest reading is that it corroborates long-standing structural concerns about the scheme without, by itself, proving specific instances of corrupt exchange in every flagged case.

The cash economy the judgment does not touch

The most significant limitation of the bonds verdict is that it addresses only one channel of political funding while leaving India's substantial cash-based donation economy almost entirely untouched. Indian election law permits political parties to receive cash donations up to a threshold, currently set at two thousand rupees per donor, without disclosing the donor's identity, and there is little to prevent parties from aggregating a large number of below-threshold cash contributions of dubious provenance without any auditable trail. Election Commission and Association for Democratic Reforms analyses of party income disclosures have repeatedly flagged that a substantial share of declared party income across every major party continues to come from sources below this disclosure threshold, a pattern that predates the bonds scheme and has continued after its removal. Any account of the bonds judgment as having fixed India's political funding transparency problem has to reckon with the fact that this parallel cash channel, arguably more opaque than bonds ever were, remains fully legal and largely unaddressed.

State-level opacity beyond national headlines

A further gap concerns state assembly elections, where funding flows receive far less journalistic and judicial scrutiny than national elections despite the enormous sums involved in some state contests. Karnataka's and Telangana's recent assembly elections, for instance, both saw disclosed campaign expenditure figures that independent observers considered implausibly low relative to visible campaign activity on the ground, a discrepancy that election law addresses through expenditure ceilings but that enforcement mechanisms have proved largely unable to police in practice. The bonds judgment's transparency logic, focused as it was on a specific national-level instrument, has no direct bearing on this state-level enforcement gap, which likely accounts for a larger share of India's actual undisclosed political money than the bonds scheme itself did during its operative years.

Why no party has strong incentive to close these gaps

The honest structural point, uncomfortable as it is, is that no major party currently benefiting from the existing system has a strong incentive to close the remaining gaps unilaterally. The party in power at any given moment benefits from incumbency advantages in fundraising regardless of the specific instrument used, and opposition parties, while criticising the ruling party's use of a particular funding channel, have generally not proposed comprehensive alternatives that would also constrain their own access to undisclosed cash donations once in power. This is not a partisan observation aimed at any single party; every party that has held power at the Centre or in major states across the past three decades has drawn on some combination of disclosed and undisclosed funding sources, and reform proposals have tended to gain momentum only when a party is out of power and therefore has less to lose from increased transparency.

What a fuller reform would require

A more complete reform would need to lower or eliminate the cash donation disclosure threshold, mandate real-time public disclosure of all donations above a modest amount rather than the periodic and often delayed disclosure currently required, strengthen the Election Commission's independent auditing capacity for both national and state-level campaign expenditure, and consider some form of state funding of elections, an idea that has been studied by the Indraprastha Institute of Information Technology and periodically recommended by law commissions without ever securing legislative consensus. None of this is likely to happen quickly, since it would require the very political actors who benefit from the current gaps to legislate away their own advantage. The bonds judgment was a genuine and overdue correction to one specific mechanism of opacity. Treating it as the end of the reform conversation, rather than its overdue beginning, would squander the rare moment of judicial and public attention it created.