In a powerful and much anticipated judgment in Association for Democratic Reforms v. Union of India (2024)[1], the Supreme Court brought down the curtain on India’s controversial Electoral Bonds Scheme (EBS). This wasn’t just a verdict about election funding, it was a resounding statement about the kind of democracy the Indian Constitution demands. By striking down both the scheme and the legal amendments that propped it up, the Court reaffirmed a foundational truth: In a democracy, the people have the right to know who funds political parties, and how much.

What made this case so significant wasn’t just the scale of money involved or the high-profile political ramifications. It was the constitutional principles at stake. The Court made clear that anonymous political donations, particularly from corporations, pose a serious threat to transparency, electoral fairness, and the right of citizens to make informed choices. In doing so, the judgment weaved together key strands of Indian constitutional law, from the right to information and electoral integrity to the role of political parties as quasi-public institutions.

This article breaks down what the Supreme Court actually decided, why it matters, and how it compares with how other democracies like the United States and members of the European Union approach political funding. It also explores how this ruling fits into a broader trend in Indian constitutional law, one where the Court is increasingly willing to hold the State to higher standards of democratic accountability. In an era of growing concern over institutional capture and opaque governance, the Court’s message was loud and clear: Democracy demands sunlight.

II. The Constitutional Question: Rights, Parties, and the Electoral Sphere:

At the core of the litigation lay a deceptively simple question: Can the State, in the name of curbing black money, authorise a legal regime that facilitates anonymous and unlimited donations to political parties? The Court answered this in the negative by elevating the voter’s right to information to a structural cornerstone of free and fair elections.

Building on its earlier precedents such as People’s Union for Civil Liberties (PUCL) v. Union of India (2003)[2] and Union of India v. ADR (2002)[3], the Court held that Article 19(1)(a)[4] encompasses not only the right to speak, but the right to receive information that is necessary for participatory governance. Political parties, though not State actors, are central to the constitutional scheme; they act as intermediaries between citizens and the State, influence policy, and form governments. The Court thus affirmed that the flow of financial resources to political parties is a matter of public concern, implicating constitutional rights.

This treatment of political parties as public-facing constitutional actors is doctrinally significant. It rejects the fiction that parties are purely private associations and instead views them as institutions that must be constitutionally disciplined where their operations affect democratic integrity. The Court’s recognition that non-State actors can attract constitutional obligations in electoral contexts is consistent with evolving jurisprudence on horizontal application of rights. Importantly, this reimagines the architecture of representative democracy itself, not merely as a formal exercise of franchise but as a relationship of trust and accountability between citizens and political intermediaries.[5]

III. The Structure of Justification: Proportionality and Its Deployment:

The real backbone of the Court’s decision lay in how it applied the proportionality test from the Puttaswamy judgment (2017)[6]. In simple terms, this test helps decide whether a restriction on fundamental rights goes too far. It asks four things: Is the government pursuing a legitimate goal? Is there a logical connection between the measure and that goal? Is the method used the least harmful one available? And finally, does the benefit of the restriction outweigh the harm it causes?

The Court accepted that tackling black money is a legitimate aim. But that wasn’t enough. It found that the Electoral Bond Scheme did not meet two key parts of the test: necessity and proportionality. Giving donors total anonymity wasn’t the only way to curb black money. Less intrusive options like real-time disclosure or regulated transparency existed and could have worked just as well. More importantly, the secrecy seriously harmed voters’ right to know who’s funding political parties, which goes to the heart of free and fair elections.[7]

In short, the Court said the price of secrecy was too high. The damage it did to democratic values like transparency, accountability, and equality in the electoral process simply outweighed whatever benefits the government claimed the scheme had.

What’s important here is not just the conclusion the Court reached, but how it got there. Instead of deferring to the government’s judgment, the Court asked hard questions and demanded clear answers. That’s the strength of the proportionality test. It’s not just about what the government wants to achieve, but whether it’s gone about it in a fair and justifiable way. It signals a move away from vague standards like “reasonableness” and towards a more structured approach that focuses more on rights. The Court did not apply this test in a mechanical way either. It paid attention to the real world impact of political financing, which is the power imbalance it creates, how it opens the door to financial influence in politics, and what that means for ordinary voters. This wasn’t just about legal principles in the abstract. It was more about protecting the integrity of democracy itself.[8]

IV. The Normative Core- Electoral Equality and Democratic Legitimacy:

Perhaps the most compelling aspect of the judgment is its normative vision of democracy. The Court identified electoral equality, the idea that each citizen must have an equal capacity to influence electoral outcomes such as intrinsic to free and fair elections. The Electoral Bonds Scheme, by enabling corporate entities with vast financial resources to fund parties anonymously and without limit, creates conditions for structural inequality in political influence. Such a regime undermines the “level playing field” that elections presuppose.

In recognising that money in politics can have a distorting effect on democratic choice, the Court implicitly embraced a republican vision of democracy, one that values civic equality, public reason, and institutional accountability over private economic power. It rejected the libertarian premise that political spending is simply an exercise of free speech, choosing instead to foreground the dangers of capture, opacity, and elite dominance.

The Court also drew an important link between transparency and electoral participation. When voters are deprived of information about who funds whom, they are stripped of the ability to make informed choices. The ballot becomes an act of faith, not reasoned judgment. Transparency, therefore, is not a procedural accessory but a substantive guarantee that animates the right to vote.

V. Comparative Constitutional Perspectives- Contrasting the US and EU Approaches:

The Indian Court’s insistence on transparency diverges sharply from the US Supreme Court’s First Amendment jurisprudence. In Citizens United v. FEC (2010)[9], the US Court held that corporate political spending is a form of protected speech, and that restrictions on independent expenditures violate the First Amendment. While disclosure requirements have been upheld, the American framework prioritises donor autonomy and minimal State interference.

India’s constitutional culture, by contrast, does not treat political finance as a realm of private liberty but as an instrumentality of public accountability. Whereas the US framework leans toward deregulated pluralism, the Indian approach embodies a structurally egalitarian model of democracy, one that permits restrictions on funding to preserve the integrity of elections.

The European Union’s model, particularly in countries like Germany and France, presents a more appropriate comparator. These jurisdictions impose strict limits on campaign finance, require comprehensive disclosure of donations, and often provide public funding to political parties.

The European Court of Human Rights, while protecting political expression, has upheld state interests in maintaining transparency and preventing corruption in the electoral sphere.

By aligning more closely with the EU model, the Indian Supreme Court recognises that democracy is not only about formal equality at the ballot box, but about the substantive conditions that enable fair competition. Transparency in funding is not ancillary to elections; it is constitutive of their legitimacy.

This comparative stance also reveals the normative pluralism of constitutional democracies. Whereas the US model privileges negative liberty and individual rights, the Indian and European approaches embed rights within a matrix of collective interests and public reason. The Indian Court’s jurisprudence is thus not merely an exercise in adjudication but in constitutional statecraft—crafting norms that reflect the specific moral and institutional ecology of Indian democracy.[10]

VI. The Political Economy of Electoral Finance- Contextualizing the Scheme:

To fully appreciate the significance of the Supreme Court’s judgment, it’s important to consider the broader political and economic context in which the Electoral Bonds Scheme was introduced. This wasn’t just a new method of political funding. It was something that marked a sharp departure from existing norms around transparency and accountability in campaign finance.

Introduced in 2017, the scheme was made possible through a set of amendments to laws like the Representation of the People Act[11], the Companies Act[12], and the Income Tax Act[13]. These changes allowed individuals and companies to donate unlimited amounts to political parties, anonymously, by purchasing bearer bonds through the State Bank of India.

What raised immediate concern was the manner in which these amendments were passed as part of a Money Bill. This effectively bypassed the Rajya Sabha, where the government lacked a majority. That procedural manoeuvre drew constitutional criticism, later addressed in Rojer Mathew v. South Indian Bank[14], where the Court questioned the misuse of the Money Bill route. However, the real issue lay in the design of the scheme. It removed earlier limits on corporate donations and allowed even shell companies  with no real business activity  to contribute funds without revealing the beneficiary political party. This opened the door to unchecked influence and created a structure ripe for abuse.

In practice, the scheme produced a highly uneven playing field. The ruling party, by virtue of being in government, had better access to institutional mechanisms and donor information and unsurprisingly, received a disproportionately large share of the contributions. This raised legitimate concerns about potential quid pro quo arrangements. Meanwhile, the public was left with no way to trace the money trail. Voters were kept in the dark about who was funding political parties, and how that might influence policy decisions down the line.

This is the reason the Court’s ruling cannot be read as a narrow legal outcome. It is a broader institutional response, a necessary correction to the growing entanglement between money and politics. At a time when public trust in institutions is declining, and political finance is becoming increasingly opaque, the judgment reasserts a basic constitutional principle that transparency is not optional in a democracy. If voters are to make informed choices, they must know who is funding the parties that seek to represent them.[15]

VII. Conclusion- Toward a Democratic Constitutional Future:

Association for Democratic Reforms marks a reassertion of constitutionalism as a democratic ethic. By invalidating the Electoral Bonds Scheme, the Court restored the normative primacy of transparency, equality, and accountability in India’s electoral framework. It recognised that the health of a democracy depends not only on the conduct of periodic elections but on the structural conditions that make those elections meaningfully fair.

More broadly, the judgment signals a jurisprudential shift: from abstract rights declarations to structured, reasoned adjudication that holds the State to account. In a time when democratic backsliding and institutional erosion are global concerns, the decision offers a model of how constitutional courts can serve as bulwarks of public reason and guardians of deliberative democracy.

The veil has been struck. What remains is for Parliament, civil society, and the citizenry to build a political finance regime worthy of the democratic aspirations of the Constitution—a regime that affirms that democracy is not for sale, that public trust cannot be mortgaged to private interest, and that the Constitution remains a living charter of equality and accountability.

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[1] Association for Democratic Reforms v. Union of India, (2024) 5 SCC 1

[2] People’s Union for Civil Liberties v. Union of India, (2003) 4 SCC 399.

[3] Union of India v. Association for Democratic Reforms, (2002) 5 SCC 294.

[4]India Const. art. 19, cl. 1(a).

[5] The Hindu, Supreme Court declares electoral bonds scheme unconstitutional, https://www.thehindu.com/news/national/electoral-bonds-scheme-unconstitutional-sbi-should-reveal-the-details-of-donors-rules-sc/article67848211.ece (last visited July. 25, 2025)

[6]K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1.

[7] Supreme Court Observer, Constitutionality of the Electoral Bonds Scheme, https://www.scobserver.in/cases/association-for-democratic-reforms-electoral-bonds-case-background/ (last visited July. 25, 2025)

[8] SCC Online, Analysis and Anatomy of Electoral Bond Judgement, https://www.scconline.com/blog/post/2024/02/20/analysis-and-anatomy-of-electoral-bond-judgment/ (last visited July. 25, 2025)

[9]Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).

[10]Venice Commission, “Guidelines on Political Party Regulation,” Council of Europe (2010).

[11] The Representation of the People Act, No. 43 of 1951, India Code (1951).

[12] The Companies Act, No. 18 of 2013, India Code (2013)

[13] The Income-tax Act, No. 43 of 1961, India Code (1961).

[14] Rojer Mathew v. South Indian Bank, AIRONLINE 2019 SC 1514

[15]Tarunabh Khaitan, “Democracy, Equality and the Electoral Bonds Judgement,” Indian Constitutional Law Review (2024).

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Author: Arka Roy

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