E-Bonds: Code Anonymous in Indian Elections1

Abstract

The Indian political regime is afflicted with illicit political funding, corruption, communalization,
and criminalization of politics. As per the ADR report, between the Financial Year 2004-05 and
2018-19 national parties received Rs11,234 crores in donations from unknown sources. Thus, the
State proposed reforms to curb dubious electoral funding by capping cash funding by a single
anonymous donor to Rs2000 (previously Rs20,000) and introducing Electoral Bonds (E-bonds).

In this article, I have elaborated on the efficacy of this scheme by examining two narratives. First,
the introduction of Electoral Bonds and incidental amendments made in several Acts would 1)
grant exemption to political parties from disclosing donation and payment of tax; 2) facilitate
donor anonymity and deleterious corporate nexus and; 3) allow unlimited funding from foreign
companies. Second, the constitutional validity of Electoral Bonds can be challenged as 1) it
infringes the citizens’ Right to Informed Voting under Article 19(1)(a) of the Constitution; 2)
introduction of this scheme in the form of Money Bill goes against the principles enshrined in the
Constitution and; 3) disregard to grave concerns raised by the Reserve Bank of India as well as the
Election Commission shows abuse of power.

The article highlights that E-bonds promise minimal transparency, limit digitalization and
legitimize privacy in political funding which breeds corruption. However, these issues can be
resolved by adopting certain reforms such as bringing political parties within the ambit of RTI to
enforce citizens’ Right to Informed Voting, empowering the Election Commission and the Income
Tax Department, checking amendments brought in Acts that promote crony capitalism, and
regulating election expenses. Moreover, the Supreme Court’s intervention in the regulation of E-
bonds is necessary to ensure it does not infringe the citizens’ fundamental rights and sear through
the fabric of democracy by legitimizing opacity in electoral funding.

1
Vrinda Bhardwaj is a Judicial Law Clerk cum Research Assistant at the Supreme Court of India. Kumar Mangalam
is a final year student at the National Law University, Odisha.

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 Table of Contents
I. Introduction 2
II. Electoral Bonds Explained 3
III. Amendments and their legal implication 3
1. Exemption from disclosing donation and payment of tax 3
2. Donor anonymity and deleterious corporate nexus 4
3. Unlimited funding from foreign companies 4
IV. Constitutionality of Electoral Bonds 5
1. Right to Informed Voting 5
2. Electoral Bonds introduced as a Money Bill 6
3. Prior consent of the RBI and Election Commission 7
V. Judicial Intervention 8
VI. Conclusion 9

I. Introduction

The Indian political regime is afflicted with illicit political funding, corruption, communalization,
and criminalization of politics. There has been a sharp erosion of the preeminent democratic
structure due to the dominance of money and muscle power. Even after decades of Indira Gandhi
v Raj Narain2, dubious electoral funding plagues politics. According to the Association for
Democratic Reforms (ADR) Report, from 2004-05 to 2014-15, the income generated by national
parties and regional parties from unknown sources increased by 313% and 652%, respectively.3
Furthermore, between the Financial Year 2004-05 and 2018-19 national parties received Rs11,234
crores in donations from unknown sources.4 Implying private and not public interest dictates
policy; abets crony capitalism and chauvinistic polity.
The Finance Act 2017, which was passed by the Parliament, brought in four significant changes
to the electoral funding system. These were (a) introduction of Electoral bonds;5 (b) removal of
donations made to political parties by companies in India;6 (c) exemption granted to companies to
disclose donations made to political parties;7 (d) capping cash donations to a maximum amount of

2
(1975) 4 SCC 428.
3
Devesh K Pandey, ‘69% of political funds was from unknown sources’(The Hindu, 08 July
2017)<https://www.thehindu.com/news/national/69-of-political-funds-was-from-unknown
sources/article17089815.ece> accessed 17 March 2020.
4
‘National parties got Rs 11,234 crore donation from unknown sources from 2004-19: ADR’ (India Today, 10 March
2020) <https://www.indiatoday.in/india/story/national-parties-got-rs-11-234-crore-donation-from-unknown-sources-
from-2004-19-adr-1654134-2020-03-10> accessed 15 March 2020.
5
Representation of the People Act 1951, s 29C; Reserve Bank of India Act 1934, s 31 Income Tax Act 1961, s 13-A
as respectively amended by Finance Act 2017, s 137, 135, and 11.
6
Companies Act 2013, s 182 as amended by Finance Act 2017, s 154.
7
ibid.

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Rs2000.8 Thus, the State proposed four reforms. These include capping cash funding by a single
anonymous donor to Rs2000 (previously Rs20,000) and the introduction of Electoral Bonds (E-
bonds).

II. Electoral Bonds Explained

Electoral bonds are a bearer instrument like an interest-free promissory note.9 They are valid for
15 days after being issued from an authorized bank10 and can be purchased only by making
payment through a bank account on fulfilment of Know Your Customer (KYC) requirements.11
The instrument will neither carry the name of the buyer nor the payee to ensure anonymity12 and
can be redeemed in the bank account of political parties.

While the bank will have the details of which bond is redeemed by which political party, the details
will not be made public.13 A purchaser with a KYC-complaint bank account can buy them from
certain notified SBI branches only for specific denominations by cheque or digitally.14
Furthermore, the companies will not be required to disclose the sum spent on electoral bonds in
their balance sheet.15 Registered political parties, which have secured at least 1% vote in recent
elections, would be eligible to encash these bonds through a designated bank account.16

III. Amendments and their legal implication

1. Exemption from disclosing donation and payment of tax

Electoral bonds are exempted under Section 29(c) of Representation of People’s Act, 1951 17 ,
which mandates each political party to disclose any donations above Rs20,000 in its Annual
Contribution Report made to the Election Commission.18 This exemption regarding disclosure to
the election commission is made possible by way of an amendment to the Reserve Bank of India

8
Income Tax Act 1961, s 13-A as amended by Finance Act 2017, s 11; In addition to the above stated amendments,
the Parliament also amended s 2(1)(j)(vi), Foreign Contribution (Regulation) Act 2010 via Finance Act 2016, in order
to expand the definition of ‘foreign source’ to further broaden the constituency of donors.
9
What is an electoral bond? (Business Standard, 12 February 2018)< https://www.business-standard.com/about/what-
is-electoral-bond> accessed 29 March 2020.
10
‘The Government of India notifies the Scheme of Electoral Bonds’ (Press Information Bureau, Government of India;
02 January 2018) <http://pib.nic.in/PressReleseDetail.aspx?PRID=1515123> accessed 21 March 2020.
11
ibid.
12
ibid.
13
‘The Government of India notifies the Scheme of Electoral Bonds’ (n 9).
14
Niranjan Sahoo, ‘How electoral bonds distort India’s democracy’ ( Observer Research Foundation, 28 March
2019)< https://www.orfonline.org/expert-speak/how-electoral-bonds-distorts-indias-democracy-49344/ > accessed
11 March 2020.
15
Companies Act 2013, s 182 - Prohibitions and Restrictions Regarding Political Contributions.
16
‘Sale of Electoral Bonds at Authorised Branches of State Bank of India (SBI)’ (Press Information Bureau,
Government of India; 27 October 2018) <http://pib.nic.in/newsite/PrintRelease.aspx?relid=184418 > accessed 20
March 2020.
17
Representation of the People Act 1951, s 29C - Declaration of donation received by the political parties.
18
Representation of the People Act 1951, s 29C; Income Tax Act 1961, s 13-A.

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Act, 1934,19 by which the Government can authorize certain banks to issue electoral bonds
enabling channelization of these bonds through a banking system. Similar amendments were made
under Section 13A of Income Tax Act 196120 and Section 182 of the Companies Act 201321 ,
conferring tax exemption to recognized political parties.

2. Donor anonymity and deleterious corporate nexus

Section 182 of the Companies Act, 201322 was amended to remove the cap that barred a company
from donating more than 7.5% of the Net Profits in 3 preceding FYs, and the company need not
have existed for three years.23 This provision allows companies that have not earned profits in the
last three years to donate unlimited money to the political parties. This draconian amendment could
lead to mushrooming of “shell companies” transferring their illegal money to political parties using
electoral bonds, which is pernicious as various such companies work with the Government.24
Moreover, this facilitates the deleterious corporate-political nexus via cash routing by shell
companies promoting unbridled crony capitalism. Thus, ‘cronies’ in power will get preferential
treatment thereby, increasing economic inequality and abetting corruption. Lastly, donor
anonymity is reserved only for the public as the Government owns major stakes in SBI and can
know information through KYC norms.25

3. Unlimited funding from foreign companies

Through the Finance Act, the Foreign Contribution (Regulation) Act 2010 was amended to enable
unlimited political funding by foreign companies done anonymously without the knowledge of the
Election Commission or Income Tax Department. The existing practice of recognizing electoral
trusts,26 through which such donations could be made, was already a device that created one degree
of anonymity for the donors,27 but with the electoral bonds, there will be complete anonymity and
no limit on the number of donations that corporations both foreign and domestic, make to political

19
Reserve Bank of India 1934, s 31 amended by Finance Act 2017.
20
Income Tax Act 1961, s 13-A - Special provision relating to incomes of political parties.
21
Companies Act 1956, s 293 A- Prohibitions and restrictions regarding political contributions.
22
Companies Act 2013, s 182 - Prohibitions and Restrictions Regarding Political Contributions
23
Tanvi Deshpande, ‘Non-tax proposals in the Finance Bill, 2017’ (PRS Legislative Research, 22 March 2017)
<https://www.prsindia.org/theprsblog/1462> accessed 27 March 2020.
24
Prashant Bhushan, The Case That Shook India (3rd edn, Penguin Books 2018) 12.
25
Poonam Agarwal, ‘Experts Slam Modi Govt’s Reply to Electoral Bond Challenge in SC’ (Bloomberg Quint, 22
March 2019)< https://www.bloombergquint.com/politics/lok-sabha-election-political-donation-govt-sc-on-electoral-
bonds-sham-experts> accessed 28 March 2020.
26
Samya Chaterjee & Niranjan Sahoo, ‘Corporate Funding of Elections: The Strengths and Flaws’ (Observer Research
Foundation Issue Brief no. 69, 4 Feb 2014) <http://www.orfonline. org/research/corporate-funding-of-elections-the-
strengths-and-flaws/> accessed 17 March 2020.
27
Aradhya Sethia, ‘Where’s the money? Paths and Pathologies of the Law of Party Funding’ (2019) 1 NLUD Journal
of Legal Studies 96,98.

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parties.28 These pose prospective legal challenges making political funding more opaque and
obscure.

IV. Constitutionality of Electoral Bonds

The constitutionality of Electoral bonds can be challenged in three ways; (a) infringement of the
Right to Informed Voting under Article 19(a) of the Constitution; (b) validity of Electoral Bonds
being passed as a Money Bill; (c) disregard to grave concerns raised by the RBI and Election
Commission regarding amendments in certain Acts.

1. Right to Informed Voting

The doctrine of the informed vote was first exposited by the Supreme Court in ADR v Union of
India29 and later elaborated in PUCL v Union of India.30 The doctrine finds its antecedents in other
penumbral rights mentioned under Article 19(1)(a) of the Constitution of India31 – primarily the
Right to Know and the freedom to vote. The Right to Know was first articulated as a facet of
freedom of speech in cases pertaining to evidentiary privilege under Section 123 of the Indian
Evidence Act32. The Court dealt with the question of whether the State can claim the privilege
under Section 123 of the Indian Evidence Act 1872. In State of UP v Raj Narain33, the Court held
that the Right to Know about government organizations and functionaries has its origins in freedom
of speech guaranteed as a Fundamental Right under Article 19(1)(a) of the Constitution of India.
It further went on to hold that “the people of this country have a Right to Know every public act,
everything that is done in a public way, by their public functionaries.”34 However, it is in Secretary,
Ministry of Information and Broadcasting Government of India v Cricket of Association of West
Bengal35 that for the first time, the Supreme Court definitively established a full-fledged “Right to
be Informed” under article 19(1)(a) of the Indian Constitution: “The freedom of speech and
expression includes right to acquire information and disseminate it.”36 Moreover, the freedom of
expression also includes ‘the right to be educated, informed and entertained.’37 “The right to
participate”, held the Court, “is meaningless unless the citizens are well-informed.”38 The
relevance of the Right to be Informed of funding of political parties was best articulated in Buckley

28
Bhushan, The Case that shook India (n 23) 11.
29
(2002) 5 SCC 294.
30
(2003) 4 SCC 399.
31
The Constitution of India 1950, a 19(1)(a).
32
Indian Evidence Act 1872, s 123 - Evidence as to affairs of State
33
(1975) 4 SCC 428.
34
ibid.
35
(1995) 2 SCC 161.
36
ibid.
37
ibid.
38
Ibid.

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v Valeo, where the US Supreme Court was required to decide the constitutionality of statutory
disclosure requirements on contributions made to candidates and political committees.39

Further, complete disclosure about the funding of political parties can either result in the ending
of mutually beneficial transactions or push electorates against voting for political leaders who have
used or are most likely to use their position as an elected candidate for mutually beneficial
transactions. Therefore, disclosure of sources of funding by political parties is vital information
for the electorates. These two rationales may converge as “the prospect of voter awareness of a
contribution may make the recipient less likely to provide a donor with favours.”40

One may argue that electoral bonds merely facilitate but do not mandate anonymity. Even in the
matter of ADR, the law neither prevented nor mandated any disclosure. The Court had held that
the absence of mandatory disclosure itself resulted in the violation of voters’ Right to Know and
went on to direct mandatory disclosure.41 Therefore, even if electoral bonds only facilitate
anonymity and do not mandate it, to the extent these bonds facilitate anonymity, they infringe upon
the Right to Informed Vote.42

2. Electoral Bonds introduced as a Money Bill

Article 110 (1) of the Constitution of India defines Money Bill, and Article 109(1) defines the
procedure adopted for the passage of the Money Bill. A Money Bill can be introduced only in Lok
Sabha43 and contains provisions incidental or related to “taxation, borrowings by the government,
or expenditure from the Consolidated Fund of India only.”44

Furthermore, Article 117 of the Constitution of India defines Financial Bill as that bill that deals
with the heads mentioned in Article 110(1) or any other additional matter.45Finance Bill is further
classified into two categories, namely, Category-I and Category-II. Category-I deals with subjects
pertaining to Article 110(1) and Category-II with other matters.46 Electoral Bonds, at best, will fall
under Financial Bill-Category II. Category II bills require the assent of both Lok Sabha and Rajya
Sabha.47 Therefore, any Financial Bill can be tabled on the floor of Parliament as a Money Bill
only in cases wherein it falls under any of the heads given in Article 110(1) of the Constitution.
However, when it comes to Electoral Bonds, they do not fall under any of the heads mentioned in

39
[1976] 424 US 1 [63].
40
Richard Briffault, ‘Reforming Campaign Finance Reform: A Review of Voting with Dollars’, (2003) 91(3)
California Law Review 643, 65.
41
Association for Democratic Reforms v Union of India (2002) 5 SCC 294 [48].
42
Sethia, ‘Where’s the money? Paths and Pathologies of the Law of Party Funding’ (n 20) 108.
43
Constitution of India 1950, a 110(1).
44
ibid.
45
Constitution of India 1950, a 117(1).
46
‘Legislative Functions of Rajya Sabha’ ( Parliament of India,
RajyaSabha)<https://rajyasabha.nic.in/rsnew/legislation/introduction.asp> accessed 7 April 2020.
47
ibid.

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Article 110 (1).48 Thus, the introduction of Electoral Bonds couched in the form of Money Bill
goes against the theory of separation of powers.49

In the case of the Money Bill, Rajya Sabha does not enjoy the same power as Lok Sabha because
if the Rajya Sabha does not pass a money bill in 14 days of its sitting, then it is deemed to be
passed.50 In a bicameral legislature such as India, the significance of the Rajya Sabha cannot be
discounted as Rajya Sabha keeps a check on the abuse of power by Lok Sabha. Hence, Lok Sabha,
with the introduction of Electoral Bonds in the Finance Act 2017 as Money Bill, has effectively
bypassed Rajya Sabha, which goes against the democratic norms and values enshrined in the
Constitution.51 To conclude, Electoral Bonds could not be introduced as a Money Bill and thus,
allowing the same would mean attacking the sacrosanct Constitution.

3. Prior consent of the RBI and Election Commission

Revelations have been made through RTI replies that many sections of the Government, which
included the Reserve bank of India (RBI),52 Election Commission (EC)53 and a wing of Finance
Ministry (Financial Sector Reforms and Legislation),54 objected to the idea of this draconian
scheme since the inception due to their independent reasons.

While replying to the Finance Ministry, RBI stated that only they have the power to issue currency,
and an amendment to Section 31 of the RBI Act will vest that power in the hands of the
Government in case of electoral bonds.55 Additionally, RBI stated that the introduction of electoral
bonds would allow money laundering and counterfeiting of currency illegally obtained, which will
funnel into the system. In several letters exchanged between RBI and the Finance Ministry, RBI
never agreed to the scheme of electoral bonds.56

48
Deshpande, ‘Non-tax proposals in the Finance Bill, 2017’ (n 22).
49
Vivan Eyben, ‘What is the Constitutional Validity of the Electoral Bond Scheme?’ (News Click, 7 February 2018)<
https://www.newsclick.in/what-constitutional-validity-electoral-bond-scheme> accessed 25 March 2020.
50
Constitution of India 1950, a 109.
51
‘Law ministry allowed Centre to pass electoral bonds scheme illegally, bypassing Rajya Sabha: Report’ (Scroll.in,
28 January 2020) < https://scroll.in/latest/951345/law-ministry-allowed-centre-to-pass-electoral-bonds-scheme-
illegally-bypassing-rajya-sabha-report> accessed 26 March 2020.
52
Nitin Sethi, ‘Electoral Bonds: Seeking Secretive Funds, Modi Govt Overruled RBI’(Huffington Post, 18 November
2019)< https://www.huffingtonpost.in/entry/rbi-warned-electoral-bonds-arun-jaitley-black-money-modi-
government_in_5dcbde68e4b0d43931ccd200?utm_hp_ref=in-homepage > accessed 21 March 2020.
53
Nitin Sethi, ‘ Electoral Bonds: Confidential EC Meeting Exposes Modi Govt's Lies To Parliament’ (Huffington
Post, 19 November 2019) <https://www.huffingtonpost.in/entry/electoral-bonds-narendra-modi-election-
commission-opposition-arun-jaitley_in_5dce3cd1e4b01f982eff5c62?utm_hp_ref=in-paisapolitics > accessed 15
March 2020.
54
ibid.
55
Reserve Bank of India Act 1934, s 31.
56
Furquan Ameen, ‘Electoral bonds controversy explained’ (The Telegraph, 23 November 2019)<
https://www.telegraphindia.com/india/electoral-bonds-explained/cid/1721437> accessed 28 March 2020

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Moreover, the objections of the Election Commission of India became public when it filed an
affidavit in the Supreme Court.57 The Commission had categorically stated in their exchange with
the Law Ministry that the introduction of electoral bonds would seriously impact the transparency
of political funding.58Additionally, it was alleged that the Government consulted several political
parties on the scheme without consulting them.59

These allegations establish that critical stakeholders in and outside the Government were not
consulted when the electoral bonds scheme was being introduced in Parliament despite grave
concerns being raised by the RBI and Election Commission about its legitimacy.60

V. Judicial Intervention

A Public Interest Litigation (PIL)61 was filed in the Supreme Court by NGOs Association for
Democratic Reforms and Common Cause to question the legitimacy of this utopian scheme,
alleging that it facilitates illegal political funding by foreign lobbyists. The Supreme Court, by way
of an interim order though refused to grant a stay on this scheme. However, it ordered political
parties to disclose all the information regarding donations via Electoral Bonds to the Election
Commission till 15th May 2019.62 The Court also directed all the political parties to disclose
information of donors like name, amount and bank details in a sealed envelope by 30th May 2019.63

It is to be noted that most of the parties did not comply with the order and submitted detailed
information related to the donor way after 30th May 2019.64 It was argued that the KYC norms are
verified by the bank before furnishing the E-Bond, so it enables transparency, but the Apex Court
rightly observed that verification of KYC norms does not guarantee verification of the source of
money. Association for Democratic Reforms filed an application for a stay on electoral bonds in

57
Krishnadas Rajagopal,’Electoral bonds hit transparency in political funding, says Election Commission (The Hindu,
27 March 2019) <https://www.thehindu.com/news/national/electoral-bonds-hit-transparency-in-political-funding-
says-election-commission/article26656311.ece > accessed 12 March 2020.
58
Sethi, ‘Electoral Bonds: Confidential EC Meeting Exposes Modi Govt's Lies to Parliament’ (n 52).
59
ibid.
60
Sethi, ‘Electoral Bonds: Seeking Secretive Funds, Modi Govt Overruled RBI’ (n 51).
61
Association for Democratic Reforms & Anr. v Union of India & Ors (SC) Writ Petition(s)(Civil) No(s)
880/2017<https://adrindia.org/sites/default/files/SC_Order_03-Oct-2017.pdf> accessed 22 March 2020.
62
Japnam Bindra, ‘ Elections 2019: Supreme Court allows electoral bonds but with riders’ (Live Mint, 13 April 2019)<
https://www.livemint.com/elections/lok-sabha-elections/elections-2019-supreme-court-allows-electoral-bonds-but-
with-riders-1555047325861.html> accessed 28 March 2020.
63
Association for Democratic Reforms v Union of India (2019) SC Writ Petition No. 880 of 2017, Order dated 12
April 2019 <https://adrindia.org/sites/default/files/16902_2015_Order_12-_Apr_-_2019.pdf> accessed 24 March
2020.
64
‘ BJP, Congress among parties yet to submit electoral bond details to EC’ (Business Standard,20 November 2020)
< https://www.business-standard.com/article/pti-stories/bjp-cong-among-parties-yet-to-submit-details-to-ec-on-
electoral-bonds-119060400543_1.html> accessed 17 March 2020

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the Supreme Court in November 2019 based on the RTI replies, which threw light upon the glaring
lapses on the part of the Government (matter sub-judice65).66

The need of the hour is for the Supreme Court to expedite the final hearing on the petition
challenging Electoral Bonds and deliver a verdict clarifying the situation soon. The anonymity
created by the electoral bonds gives an unfair advantage to the ruling party in the Centre. It cannot
be denied that failure to give an early hearing to this matter has already led to the free functioning
of the electoral bonds scheme in several major elections of the country, including the 2019 Lok
Sabha elections.67 This has jeopardized the process of fair elections in India, which is
quintessential for the functioning of a viable democracy.68

VI. Conclusion

E-Bonds promise minimal transparency, limited digitalization and an apparent deterrent to black
money circulation. Since political parties are not required to keep records of the donors and
donations, it facilitates tax evasion and channelization of illegal money. Moreover, donor
anonymity and unlimited foreign funding create opacity and non-accountability in the political
funding structure. The cons outweigh the pros. However, specific recommendations, if
implemented, can minimize the damage.

Firstly, there has to be a check on the amendments made to the Finance Act, Companies Act and
RBI Act as these amendments bolster nefarious corporate black money apportion within the
political realms. Donor anonymity, exemption from disclosing information and checkless funding
from sources abroad promotes crony capitalism thereby, increasing economic inequality and
harming free opportunity due to favouritism to specific businesses. This jeopardizes national
security by acceptance of large donations from unknown sources abroad.

Secondly, political parties should come under the ambit of the Right to Information (RTI), so the
public has the requisite information to make informed decisions during elections thereby,
upholding the Right to Informed Voting. In 2013, the Central Information Commission (CIC)
ruled that political parties can be interpreted as ‘Pubic Authorities’ within the meaning of the RTI

65
Shruti Mahajan,‘No immediate stay on Electoral Bonds scheme for now: Supreme Court’ (Bar and Bench, 20
January 2020)< https://www.barandbench.com/news/litigation/no-immediate-stay-on-electoral-bonds-scheme-for-
now-supreme-court> accessed 13 March 2020.
66
Association for Democratic Reforms v Union of India (2019) SC Writ Petition No. 880 of 2017, Petition dated 29
November 2019
<https://adrindia.org/sites/default/files/Application_for_the_stay_of_Electoral_Bond_November2019.pdf> accessed
28 March 2020.
67
ibid.
68
Sidney Verba,’Fairness, Equality, and Democracy: Three Big Words’ (2006) 73(2) Social Research 499 <
https://www.jstor.org/stable/40971834?seq=1#metadata_info_tab_contents> accessed 21 March 2020.

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Act69 and, therefore, can be covered under the ambit of the RTI Act. 70 However, all the political
parties have flouted this rule resulting in a breach of the citizen’s right to inquire about the political
parties’ donors and expenses.71

Thirdly, state funding of elections should be considered, which will also give a fair chance to
candidates who do not have access to large amounts of money. Indrajit Gupta Committee72 and
2nd Administrative Reforms Commission73 recommended complete State funding and partial state
funding, respectively. However, Law Commission, in its 255th Report,74 rejected the idea of
complete state funding and suggested better regulation of election expenses. Under the system of
state funding of elections, the Government can be mandated to refund each candidate, after the
elections, the expenses incurred by him/her in proportion to the number of votes received by
him/her. Thus, candidates without access to much money, if they are popular and if they receive a
significant number of votes, would be able to get a large part of their expenses reimbursed by the
State.75

Fourthly, the Income Tax Department and Election Commission should be empowered to make
political funding more transparent and canonical. Lastly, Electoral bonds give an unfair advantage
to the ruling party, which hampers the spirit of democracy. To conclude, E-Bonds enhance
transparency between the donor and the donee but not between the public and the politicians.
Electoral Bonds were introduced to bring transparency in political funding but, if left unregulated,
will now indeed challenge the sacrosanct principles of the Constitution, infringe the citizens’
fundamental rights and sear through the fabric of democracy legitimizing opacity in electoral
funding.

69
Shri Subhash Chandra Agarwal v Indian National Congress (INC) (2013) CIC Order dated 3 June 2013<
https://dsscic.nic.in/cause-list-report-web/downloaded> accessed 21 March 2020.
70
Mohammad Ali, ‘Political parties come within the ambit of RTI Act: CIC’ ( The Hindu, 3 June 2020)
<https://www.thehindu.com/news/national/political-parties-come-within-ambit-of-rti-act-cic/article4778358.ece>
accessed 24 March 2020.
71
Rukmini S, ‘CIC unable to make political parties comply with RTI’ ( The Hindu, 2 April 2016) <
https://www.thehindu.com/news/national/cic-unable-to-make-political-parties-comply-with-rti/article7002835.ece>
accessed 14 March 2020.
72
.Indrajit Gupta Committee, ‘State Funding of Elections’ (1998).
73
Second Administrative Reforms Commission, ‘State Funding of Elections’ (2008).
74
255th Law Commission Report, ‘Reform of the Electoral Laws’ (1999).
75
Bhushan, The Case that shook India (n 23) 14.

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