The electoral bonds scheme – introduced in 2018 and scrapped by India’s Supreme Court in February 2024 – transformed political fundraising. Suddenly, individuals and companies could donate crores of rupees anonymously to parties via State Bank of India (SBI) bonds.
Critics warned it would flood elections with untraceable money. Now, data emerging from SBI and the Election Commission of India (ECI) paint an astonishing picture: thousands of crores flowed through this opaque system, overwhelmingly into the coffers of the ruling Bharatiya Janata Party (BJP), often at the expense of transparency and fair play.
Former Chief Election Commissioners, activists and legal experts – from ADR to Prashant Bhushan – have decried the bonds as “legitimizing opacity” in democracy.
As the Supreme Court finally voided the scheme as unconstitutional, revealing “56% of all funding” had come through bonds, the missing billions of donor data have prompted a reckoning over political finance in India.
Political Funding Before 2017: Cash, Caps and Limits
Before electoral bonds, India’s party funding had strict if imperfect rules. Cash donations over ₹2,000 were banned by the 2013 political funding reforms, forcing most contributions through cheques or digital means. Companies could donate, but only up to 7.5% of their after-tax profits under Section 182 of the Companies Act.
In practice, loopholes were exploited – shell companies and undisclosed accounts often funneled corporate money into politics – but at least legal limits and some reporting requirements existed. The 2017 Finance Act radically changed this status quo. In one omnibus bill, the government removed the cap on corporate donations and relaxed disclosure rules.
Amendments meant companies “were only required to record the total amount of donations” in their financial statements without donor details. Similarly, political parties no longer had to report the sources of “voluntary donations” made via the new bond mechanism.
The Election Commission immediately protested. In May 2017, then-CEC Nasim Zaidi wrote to the Finance Ministry warning that these amendments would have “serious impact on the transparency aspect of political finance”.
Senior election officials and former commissioners (like O.P. Rawat, the EC Commissioner in 2017) repeatedly flagged the dangers of this hidden funding channel.
Even legal scholars noted that while the Finance Minister hailed bonds as a way to “wipe out black money,” they in fact removed checks on unlimited corporate contributions.
The Electoral Bonds Scheme: Secrecy by Design
Introduced in the 2017 Budget and notified in January 2018, electoral bonds were bearer instruments sold by SBI. Citizens and companies could purchase these bonds (in denominations from ₹1,000 up to ₹1 crore) during specified sale windows and hand them to registered parties, who then encashed them at SBI. Crucially, the bond itself carried noinformation about the buyer or beneficiary.
The bank kept the donor’s identity confidential, revealing it only under court order or criminal investigation. In effect, donations became anonymous by law, with only the issuer – a government-owned bank – holding secret records.
The government justified this as a move to encourage banking of political donations (and to curb “black money”), arguing that donors needed confidentiality to give freely. In reality, the safeguards of disclosure and corporate caps were dismantled.
The Reuters agency noted that under the old regime, corporations “had been restricted” in how much they could give, but the bond system “removed those limits” entirely. This created an unprecedented influx of funds to parties: data now show bonds accounted for over half of all reported party funding in recent years.
The bond process was managed entirely by SBI’s 29 public branches nationwide. Anyone could buy bonds by withdrawing funds from their bank and acquiring the bonds at an SBI counter; parties then needed to deposit the bonds’ value into their bank accounts within 15 days.
Apart from the promise of anonymity, the scheme simplified donations: cash was no longer needed at all. Critics, however, immediately questioned the need for secrecy. As one activist put it, the bonds created a “dark flow” of money that voters could not trace to any donor.
Legal experts cautioned that with the state (via SBI) holding all data, the ruling party might exploit information asymmetry – quid-pro-quo deals could thrive with no public scrutiny.
The Flow of Money: Who Bought Bonds?
The volume of electoral bonds surged into the tens of thousands of crores. According to court filings and activist analysis, about ₹16,500 crore (₹165.18 billion) worth of bonds had been sold by November 2023. By March 2023, roughly ₹12,010 crore had been issued, and RBI figures suggest all bonds up to 2022 totaled about ₹9,857 crore. These funds were then encashed by parties across the political spectrum.
The Election Commission, under court direction, published data from SBI revealing how bond proceeds were distributed. The pattern was clear: the BJP was the biggest beneficiary. In FY 2019–20, the BJP claimed about 82% of all bond funds. In real terms, SBI data show the BJP encashed roughly ₹20,247 crore that year, leaving only ₹1,763 crore for all others combined. (Winners in second and third place were Congress with ₹1,763 cr and the TMC with smaller amounts that year.)
The dominance shifted in 2020–21. Regional parties rose: the Yuvajana Sramika Rythu Congress Party (YSRCP) of Andhra Pradesh led with ₹95.25 crore, DMK (Tamil Nadu) had ₹80.00 cr, and Odisha’s Biju Janata Dal ₹67.00 cr, whereas BJP fell to just ₹23.38 cr.
In percentage terms, a recent analysis charts that year showing YSRCP with ~29%, DMK ~24.7%, BJD 21%, TMC 13%, while BJP got only ~7% (Congress about 3%). These data underscored the scheme’s unpredictability: when central polls were not imminent, many southern and northeastern parties attracted more donations through the bonds than the national parties did.
The BJP’s bounty returned in the 2021–22 and 2022–23 fiscal years. In FY 2021–22 the BJP received ₹1,033.70 crore (about 39%), far ahead of its rivals. West Bengal’s TMC was second at ₹529.14 cr and the DMK third at ₹305.00 crtheprobe.in. By FY 2022–23 the BJP’s share soared again: ₹12,941.5 crore (≈46% of the total), nearly five times the next party.
Its ally Telangana Rashtra Samithi (BRS) took ₹5,290.37 cr (~19%) and the TMC ₹3,251.00 cr (~12%). This left Congress far behind: just ₹1,710.2 crore for 2022–23.
In 2023–24 (up to the data released by the court), the trend continued: the BJP encashed ₹16,855.3 crore, Congress ₹8,283.6 cr and TMC ₹6,124.2 cr. (At that pace, BJP’s share was about 37%, Congress 18% and TMC 14%.) Even though opposition parties garnered more in absolute terms than before, the BJP remained the single largest recipient by far.
Across all phases, an analysis of SBI’s released figures confirmed that an overwhelming fraction of bonds went to the BJP. In 30 phases (2018–2024), SBI sold ₹16,518 crore in bonds and saw ₹16,492 crore encashed.
Senior advocate Prashant Bhushan later noted in court that “Rs 16,500-crore electoral bonds… half went to the BJP and the rest to parties like the TMC and the Congress”. He wryly observed that minor parties “not ruling did not get any money” from the scheme.
Who Gave: Top Donors and Emerging Trends
Behind the parties, who were the anonymous donors? Data leaks and Right to Information (RTI) reveals shed some light. Transparency analysts found nearly 1,300 entities – companies, associations and individuals – bought bonds totaling over ₹12,000 crore. Strikingly, just 20 top donors accounted for over half of total bond purchases.
Many of these heavy donors then channeled all or most of their bonds to the ruling party. For instance, ITC Foods (Qwikcilver Solutions) donated 91% of its bonds to the BJP. Other groups (in education, coal, etc.) also funneled primarily to BJP-linked organizations.
In contrast, some non-BJP parties’ top donors gave exclusively to them: the Justice Party foundation gave entirely to DMKindiatoday.in, and a mining magnate funded Trinamool and DMK. Overall, SBI data showed that more than 7,488 donors had given to the BJP, versus 3,269 to the TMC and 2,908 to Congress.
Independent individuals purchased only a small fraction of bonds: an ADR survey noted individuals bought about ₹375 crore worth (vs. corporate share).
Among companies, a worrying pattern emerged. Prashant Bhushan highlighted in court that firms under Enforcement Directorate or tax raids tenders bought large bonds, after which probes were abruptly dropped.
He alleged ₹2,500 crore in bonds were snapped up by such beleaguered companies, ostensibly as quid pro quo to call off investigations. If true, this implied bonds were being used as bribes to secure contracts or relief – a charge the BJP strongly denies.
SBI’s Role and RTI Revelations
The scheme’s data resided entirely within SBI. Civil society activists quickly filed RTIs to pry it loose. In one case, SBI refused to disclose its standard operating procedures for selling bonds, claiming internal confidentiality under RTI law (Section 8).
Transparency campaigner Anjali Bhardwaj challenged this, noting that SBI had “blandly invoked” secrecy despite no clear harm shown by disclosure.
Regional SBI branches provided intriguing snapshots. For example, an RTI to SBI Lucknow branch revealed it sold bonds worth ₹56.71 crore (2018–2024) but recorded only ₹14.05 crore encashed, while party filings showed BJP alone encashed ₹34.5 crore.
As former naval officer Lokesh Batra noted, SBI data said nationwide ₹16,518 cr sold and ₹16,492 cr encashed, but local branch data didn’t match parties’ own submissions. Prashant Bhushan flagged this “huge mismatch” in court, prompting the Supreme Court to demand SBI to furnish full details (dates, serial numbers) for each bond.
Throughout, SBI publicly maintained it had done nothing improper. When asked, Lucknow SBI officials feigned ignorance of bond data.
Yet even SBI’s own highest-seller branches underscored its monopoly: SBI’s Mumbai branch sold the most bonds (₹4,009.0 crore) and its Delhi branch saw the most redemptions (₹10,402.0 crore). In other words, all the “missing” money ran through SBI – and ultimately through one sitting government’s back account.
The Supreme Court Steps In
All these revelations culminated in a legal showdown. In February 2024, a five-judge Supreme Court bench (headed by CJI D.Y. Chandrachud) struck down the entire bond scheme as unconstitutional.
The ruling was categorical: electoral bonds violated citizens’ right to information and free speech under the Constitution. The court declared that anonymous donations of this scale “put a premium on opacity” and undermine democracy.
CJI Chandrachud warned that unchecked contributions give donors a “seat at the table” with government, translating into undue influence on policy.
The judgment ordered SBI to disclose identities and details of all encashed bonds to the Election Commission, which must then publish them.
It also reinstated limits on corporate donations (capping them again at 7.5% of profits, as before)reuters.com. Crucially, the Supreme Court banned any further issuance of bonds, effectively ending the scheme.
Reactions poured in immediately. Former Chief Election Commissioner S. Y. Quraishi hailed the verdict as a “great boon for democracy”. Ex-CECs O.P. Rawat, Navin Chawla and T.S. Krishnamurthy all welcomed the decision, noting it addressed many ECI concerns (like shell companies routing funds) and “ushered in a big electoral reform”.
Rawat – who had warned in 2017 that bonds could be misused by shell firms – observed the scheme had never truly “obliterated” black money and suggested introducing caps on donations. Chawla praised the “unraveling” of the bond scheme’s mystery, saying transparency would now improve how elections are financed.
The government’s response was more guarded. Home Minister Amit Shah, who helped introduce bonds in 2017, argued that abolishing the scheme might bring back illicit cash in politics. Prime Minister Modi lamented that “everyone will regret” the loss of a system that (in his view) combatted black money.
Union Minister Rajeev Chandrasekhar accused Congress of hypocrisy, given past scandals, when Rahul Gandhi labeled bonds “the biggest corruption scandal on the planet” that extorted businessmen.
In parliament, opposition leaders seized on the verdict. Congress chief Mallikarjun Kharge and others pressed for reform of party funding laws. Rahul Gandhi, addressing a rally, called the scheme “India’s biggest extortion racket” through which “thousands of crores” were illegally obtained.
Mamata Banerjee quipped that only a “Dropbox” outside the party office could explain how donations arrived – a dig at the secrecy around TMC receipts. Civil society organizations like ADR and Common Cause celebrated the judgment, demanding SBI and ECI fully comply with the disclosure orders.
Comparative Perspective: Secrecy vs Transparency
India is not alone in wrestling with anonymous donations, but its experiment was extreme. In established democracies, laws usually curb secret funding. The UK, for instance, bans anonymous donations above £500 (about ₹50,000) to parties, requiring those sources be identified and published.
The U.S. grapples with “dark money” after the 2010 Citizens United decision unleashed unlimited spending by nonprofits; still, campaign contributions (by party/candidate) must be disclosed, even if outside groups can hide donors.
By contrast, Brazil’s Supreme Court outlawed corporate donations in 2015, forcing all political funds to come from individuals. Even countries like South Korea – after scandal – strictly regulate political donations via public funds and bans on big anonymous gifts.
In other words, the norm is transparency. The foreigners are bracing to see how India adapts. A Stimson Center commentary notes that the bond verdict highlights how anonymous donations “undermine democracy”.
In the South Asian Voices review, only five days before polls, bonds accounted for “56 percent of all funding” and enabled a few corporations to wield outsized influences. Now India’s case may inform other nations debating “dark” election money: the Supreme Court has essentially joined Brazil in saying secret corporate cash is unacceptable, and given the UK-like insistence that voters deserve to know who pays politicians.
The Road Ahead: Transparency or Back to the Shadows?
With electoral bonds abolished, what replaces them? The Congress and many activists want reform: a national election fund, strict donation caps and mandatory disclosure of all contributions – a system far more public than the bond era.
Even some in the BJP acknowledge the need for change. But uncertainty looms for the ongoing 2024 general elections: would ad hoc channels of secret cash simply return, or will parties behave more cautiously?
Prime Minister Modi has said the government will “abide by” the court’s verdict, but hinted it may revisit the issue by introducing “a better alternative” to bonds (without yet saying what). Some finance ministry documents (from an RTI) reveal officials thought bonds were a bad idea from the start – former CBDT chief Rawat had questioned them in 2017.
With the bonds era ended, reporters wonder if the billion-rupee flows will now become untaxed cash or find other legal routes. What is certain is that an entire cycle of political funding will be re-examined: corporate limits are back, and SBI’s files (with donor names) will be opened to public scrutiny.
At stake is not just money but trust in elections. The Supreme Court stressed that citizens have a constitutional right to know who bankrolls politicians. Without that transparency, voters cannot fully judge whose interests are behind each party’s policies.
As one observer put it, electoral bonds turned “the dark currents of political funding” fully out of public view. Now, with the law backtracking, the question is whether India will restore light to that funding stream – or will the missing billions simply seep into harder-to-trace channels once again.
This electoral bonds scheme investigation above draws on reporting and analysis from nonprofit watchdogs and the media.
- Shannon O’Neil, Latin America v. Citizens United, Foreign Policy (Oct. 7, 2015).
- Milan Vaishnav, Electoral Bonds: The Safeguards of Indian Democracy Are Crumbling, Carnegie Endowment/HuffPost India (Nov. 25, 2019).
- Anmol Jain, On the Politics of Non-Transparent Electoral Funding in India, Verfassungsblog (Feb. 21, 2024).
- Kunal Purohit, What are India’s electoral bonds, the secret donations powering Modi’s BJP? Al Jazeera (Feb. 15, 2024).
- Anubhuti Vishnoi, Election Commission opposed electoral bonds, Economic Times (Feb. 16, 2024).
- India’s Supreme Court scraps Electoral Bonds in setback to Modi’s BJP, Reuters (Feb. 15, 2024).
- Varun Mohan, India’s Electoral Bond Conundrum, Stimson Center – South Asian Voices (Apr. 16, 2024).
- In RTI Reply, SBI Refuses To Share Info On Its Electoral Bond Guidelines, NDTV (Apr. 2, 2024).
- RTI shows ‘discrepancies’ in EB data from SBI, Lucknow, Times of India (Mar. 19, 2024).
- Prashant Bhushan (PTI), Electoral bonds used as bribe by companies for contracts: Prashant Bhushan, Business Standard (May 11, 2024).
- “Extortion”: Rahul Gandhi Targets BJP On Electoral Bonds, NDTV (Apr. 16, 2024).
- SC verdict on electoral bonds: Still a long way to go, says former CEC, Economic Times (Feb. 16, 2024).
- Sonal Gupta, Former CECs welcome SC judgment on electoral bonds, say ECI’s concerns addressed, Indian Express (Feb. 16, 2024).
- Electoral Bonds Data Explained: 2019-2020 (full graphical), TheProbe.
- Electoral Bonds Data Explained: 2022-2023, TheProbe (Mar. 2024).
- Electoral Bonds Data Explained: 2023-2024, TheProbe (Mar. 2024).
- India Today – DIU investigation on electoral bonds (Dec. 2023). [Combined analysis of SBI/ECI data].
- Electoral Bonds and Opacity in Political Funding, ADRIndia (March 2024). [Data summary].
*You May Be interested in Reading this investigative piece by the same author, “Pandemic Profiteers: The Corrupt Contracts That Deepened U.S. Inequality“.
*Learn More About The Author Here.
