India’s political funding landscape has undergone a seismic shift following the Supreme Court’s decision to outlaw electoral bonds. The scheme, introduced by the Bharatiya Janata Party-led government in 2018, was struck down as unconstitutional, forcing parties to seek alternative avenues for campaign finance.
Recent reports highlight that electoral trusts – private entities registered under the Companies Act – have become the primary vehicle for corporate donations to the BJP, India’s ruling party. These trusts pool contributions from multiple companies and disburse funds to designated political parties, offering donors anonymity and a measure of confidentiality that the now-defunct bond system once promised.
The Supreme Court’s verdict emphasized transparency and accountability, citing the electorate’s right to information under Article 19(1)(a) of the Constitution. Electoral bonds were criticized for permitting unlimited, untraceable donations through banking channels, which critics argued fostered opaque political financing and potential quid pro quo arrangements between donors and recipients.
The BJP consistently received the lion’s share of electoral bond proceeds, as per disclosures made by the State Bank of India to the Election Commission. While other national parties also benefited, the data underscored the ruling party’s dominance in attracting high-value donations.
Trust-based donations surge following SC ruling
With the bonds scheme dismantled, electoral trusts have reported a substantial uptick in contributions. Prominent trusts like Prudent Electoral Trust, which typically allocates a majority of its funds to the BJP, have seen increased corporate participation. Analysts suggest this trend reflects corporate India’s continued preference for structured donation mechanisms that align with regulatory frameworks, even as transparency advocates call for stricter audit requirements.
The absence of electoral bonds compels political parties to revert to older methods, including direct bank transfers and cash donations, the latter still permitted up to ₹2,000 per individual without disclosure. Opposition parties have renewed demands for full transparency in political funding, while the BJP defends the trust mechanism as a legally compliant and audited alternative.
Legal experts anticipate further judicial scrutiny of electoral trusts, especially regarding their operational procedures and compliance with anti-money laundering norms. The Election Commission is expected to recommend reforms to ensure comprehensive disclosure, including real-time reporting of donations and ownership details of contributing entities.
As India approaches future state and general elections, the role of these trusts in shaping political fortunes remains a focal point. Observers suggest the shift may prompt legislative action to establish a revised framework, balancing funding needs with democratic transparency.
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