How India’s Electoral Bond Scheme Tilted Democracy

When the Electoral Bond Scheme (EBS) was launched in 2018, it was presented as a reform to make political funding cleaner and more transparent. In reality, it achieved the opposite. It concentrated financial power in the hands of the ruling party while hiding crucial information from the public.

Under the scheme, individuals and companies could buy electoral bonds from the State Bank of India and donate them to political parties, with both donor and recipient identities supposedly kept secret. However, this anonymity created a one-sided transparency: while citizens and opposition parties were kept in the dark, the government, through its control over the SBI, could easily access donor details.

This asymmetry of information became a powerful tool. The ruling party, by knowing who donated and how much, in theory it could subtly reward loyal donors through government contracts, licenses, or regulatory leniency. Most importantly, this information asymmetry would discourage others from funding rivals. Meanwhile, opposition parties had no such leverage, creating a deeply uneven political field. The scheme also removed the cap on corporate donations and allowed every company to contribute, opening the floodgates for opaque, potentially quid pro quo funding.

When the Supreme Court struck down the scheme in February 2024, the data released by the State Bank of India revealed what many had suspected all along: the Bharatiya Janata Party (BJP) had received more than half of all funds raised through electoral bonds. This dominance in funding translated directly into campaign power — advertising, logistics, and voter outreach — reinforcing the ruling party’s electoral advantage and distorting the possibility of rotation of power. Meanwhile, smaller and regional parties struggled to compete, making elections less about ideas and more about financial muscle.

Ultimately, the Electoral Bond Scheme eroded transparency, accountability, and the very foundation of fair competition in Indian democracy. By allowing vast sums of anonymous money to flow into politics, with the ruling party controlling access to information, it institutionalized inequality in the electoral process. The Supreme Court’s decision to scrap the scheme was not just a legal correction but a vital step toward restoring public trust in the integrity of India’s democratic system.