After the Supreme Court struck down electoral bonds in 2024, corporate donations surged via electoral trusts, with ₹3,811 crore distributed to political parties in FY 2024–25, highlighting a major shift toward transparency and accountability in India’s political funding.
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NEW DELHI: With the Supreme Court of India striking down the Electoral Bonds Scheme in February 2024, India’s political funding landscape has undergone a significant transformation. In the very first financial year after the verdict, corporate political donations surged through electoral trusts, an older but more transparent funding mechanism.
Official data for FY 2024–25 reveals that nine electoral trusts donated ₹3,811 crore to political parties, marking an increase of over 200% compared to the previous year. The Bharatiya Janata Party (BJP), which rules at the Centre, emerged as the biggest beneficiary, receiving ₹3,112 crore, nearly 82% of the total trust-based donations.
This sharp shift has brought electoral trusts back into public focus, raising important questions about transparency, accountability, and the future of political finance in India.
Electoral Trust Donations in 2024–25: Highlights
According to the contribution reports submitted to the Election Commission of India (ECI):
- Total donations via electoral trusts: ₹3,811 crore
- BJP’s share: ₹3,112 crore (82%)
- Congress’s share: ₹299 crore (just under 8%)
- All other parties combined: ₹400 crore (10%)
This represents a dramatic jump from ₹1,218 crore in 2023–24, when only five trusts reported donations.
As of December 20, 2024, reports from 13 out of 19 registered electoral trusts were available. While nine trusts actively donated funds, four — Janhit, Paribartan, Jaihind, and Jaybharath — reported nil contributions for the year.
Electoral Trusts and Corporate Donors
Prudent Electoral Trust: The Largest Conduit
Prudent Electoral Trust emerged as the single largest channel of political funding:
- Total donations in 2024–25: ₹2,668 crore
- Amount donated to BJP: ₹2,180.07 crore (≈82%)
Its contributors included major corporate entities such as:
- Jindal Steel and Power
- Megha Engineering and Infrastructure Ltd
- Bharti Airtel
- Aurobindo Pharma
- Torrent Pharmaceuticals
Although the trust donated to multiple parties, including Congress, TMC, AAP, and TDP, the BJP remained the principal beneficiary.
Progressive Electoral Trust
- Total corpus: ₹917 crore
- Donated: ₹914.97 crore
- BJP’s share: 80.82%
The trust’s funding primarily came from Tata Group companies, including Tata Sons, TCS, Tata Steel, Tata Motors, and Tata Power.
New Democratic Electoral Trust
- Total donations: ₹160 crore
- Amount given to BJP: ₹150 crore
Its contributors included Mahindra & Mahindra Ltd, Tech Mahindra, and Mahindra & Mahindra Financial Services.
Other Notable Trusts
- Triumph Electoral Trust: Donated ₹21 crore to the BJP out of ₹25 crore received
- Harmony Electoral Trust: Donated ₹30.15 crore to the BJP
- Janpragati Electoral Trust: Donated ₹1 crore to Shiv Sena (UBT)
- Jankalyan Electoral Trust: Split ₹19 lakh equally between BJP and Congress
What Are Electoral Trusts?
Electoral trusts are non-profit entities created to receive voluntary donations from individuals and companies and distribute them to registered political parties.
They were formally introduced under a scheme notified in January 2013 by the Central Board of Direct Taxes (CBDT) during the UPA government’s tenure enhance transparency in political funding, well before the electoral bonds framework came into existence.
Key Features of Electoral Trusts
- Must donate at least 95% of received funds to political parties
- Can retain only 5% for administrative expenses
- Donations must be made through banking channels only
- Mandatory disclosure of:
- Donor names
- Amounts donated
- Recipient political parties
- Transparency and Disclosure: Electoral trusts must submit detailed contribution reports to the Election Commission of India, disclosing both donors and recipient political parties.
- Tax Benefits: Donations made through electoral trusts are eligible for tax deductions, encouraging compliance through formal channels.
- Regulatory Oversight: Electoral trusts are regulated under the Companies Act and monitored by the Income Tax Department and the Election Commission of India, ensuring accountability.
Unlike electoral bonds, which allowed complete donor anonymity, electoral trusts are governed by strict disclosure norms.
They are required to submit:
- Audited annual accounts
- Detailed contribution reports to:
- Election Commission of India (ECI)
- Central Board of Direct Taxes (CBDT)
These reports make it possible for citizens to scrutinise both sides of political funding — who donated and which party benefited.
Electoral Bonds
Electoral bonds were introduced by the Government of India in 2018 as a formal instrument for political donations. They could be purchased by individuals and companies from authorised branches of the State Bank of India (SBI) and donated to eligible political parties.
The scheme aimed to reduce cash-based political funding by routing donations through the banking system.
Key Features
- Anonymity: The identities of donors were not disclosed to the public, a feature intended to protect donor privacy but widely criticised for undermining transparency.
- Banking Channel: Bonds were purchased and redeemed only through SBI, ensuring that transactions occurred within the formal banking system.
- Eligibility of Parties: Only political parties registered with the Election Commission of India and securing at least 1% of votes in the previous Lok Sabha or State Assembly election could receive electoral bond donations.
- Redemption: Bonds could be encashed only in a designated bank account of the registered political party.
Electoral bonds functioned like promissory notes, purchasable individually or jointly, and were redeemable solely by political parties.
Supreme Court Verdict (2024)
In February 2024, the Supreme Court unanimously struck down the electoral bonds scheme as unconstitutional and manifestly arbitrary. A five-judge Constitution Bench led by Chief Justice D.Y. Chandrachud held that the scheme violated the voters’ right to information under Article 19(1)(a).
The Court criticised the scheme for:
- Providing blanket anonymity to political donors, and
- Allowing unlimited corporate donations through amendments to the Representation of the People Act, Companies Act, and Income Tax Act.
Electoral Bond Scheme
The Electoral Bond Scheme (EBS) was introduced in 2018 as a measure to reform political funding in India. The government projected it as an electoral reform aimed at reducing cash-based donations and promoting a cashless, digital economy.
An electoral bond was a bearer banking instrument, issued like a promissory note, which did not carry the name of either the purchaser or the recipient political party.
Key Features
- Electoral bonds were issued on a non-refundable basis.
- They could be purchased by Indian citizens or entities incorporated in India from authorised branches of the State Bank of India (SBI).
- Bonds could be donated only to registered political parties that had secured at least 1% of the votes in the most recent Lok Sabha or State Assembly election.
- Transactions were conducted exclusively through banking channels, which the government claimed would enhance transparency in political funding.
- Each bond carried a unique alphanumeric number, visible only under ultraviolet light.
Supreme Court Verdict
In Association for Democratic Reforms & Anr. v. Union of India & Ors., the Supreme Court unanimously struck down the Electoral Bond Scheme, holding it unconstitutional for violating the voters’ right to information under Article 19(1)(a) of the Constitution.
Timeline of the Electoral Bond Scheme
2016
- The Finance Act, 2016, amended the Foreign Contribution Regulation Act (FCRA), 2010, allowing foreign-owned companies with Indian subsidiaries to donate to political parties.
1 February 2017
- The Union Finance Minister announced the Electoral Bond Scheme in the Union Budget 2017–18 to promote non-cash political donations.
March 2017
- Finance Act, 2017, introduced amendments to:
- RBI Act, 1934 – authorised banks to issue electoral bonds
- Income Tax Act, 1961 – exempted parties from maintaining donor details for bonds
- Representation of the People Act, 1951 – removed disclosure requirements
- Companies Act, 2013 – removed the cap on corporate political donations
January 2018
- The government formally notified the Electoral Bond Scheme, 2018.
- State Bank of India (SBI) was authorised to issue bonds in fixed denominations.
- Only political parties securing at least 1% votes in the last election were eligible to receive bonds.
2018
- Association for Democratic Reforms (ADR) and CPI(M) filed petitions in the Supreme Court challenging the scheme’s constitutionality.
2019
- The Supreme Court directed political parties to submit details of electoral bond donations to the Election Commission in sealed covers.
- The Election Commission expressed concerns over lack of transparency.
2021
- The Supreme Court declined to grant an interim stay on the scheme but acknowledged pending constitutional issues.
November 2022
- The Government amended the scheme to allow additional bond sale windows during election years.
October–November 2023
- A five-judge Constitution Bench heard arguments on the validity of the scheme.
15 February 2024
- The Supreme Court unanimously struck down the Electoral Bond Scheme as unconstitutional.
- Held that anonymous political funding violated Article 19(1)(a), voters’ right to information.
- Ordered immediate disclosure of all electoral bond transaction details by SBI.
March 2024
- SBI complied with court orders and submitted complete electoral bond data to the Election Commission for public disclosure.
Supreme Court Verdict: Electoral Bonds Case
On 15 February 2024, a five-judge Constitution Bench of the Supreme Court in Association for Democratic Reforms v. Union of India unanimously struck down the Electoral Bonds Scheme, declaring it unconstitutional.
Key Findings of the Supreme Court
- Anonymous political funding violates Article 19(1)(a) of the Constitution, as voters have a fundamental right to information about the sources of political funding.
- Unlimited corporate donations distort the democratic process and undermine free and fair elections by enabling disproportionate influence over political parties.
- Companies cannot claim a fundamental right to political privacy, as privacy under the Constitution primarily protects individual autonomy, not corporate interests.
- Transparency in political funding is essential for meaningful electoral choice, and voters are entitled to know who finances political parties.
Constitutional Reasoning
The Court applied the Doctrine of Proportionality and held that the Electoral Bond Scheme was not the least restrictive means to curb black money. While the objective of eliminating cash-based donations was legitimate, the method adopted, blanket anonymity, disproportionately infringed voters’ rights.
The Court also clarified that the right to privacy of political affiliation extends only to genuine political support by individuals, and does not cover financial contributions made to influence public policy or governance.
Directions Issued by the Court
- Immediate cessation of the issuance and sale of electoral bonds
- State Bank of India (SBI) is directed to disclose complete details of all electoral bond transactions since April 2019, including:
- Date of purchase
- Name of the purchaser
- Denomination of bonds
- Details of political parties that encashed the bonds
- The Election Commission of India (ECI) has been directed to publish the disclosed information on its official website
- Unencashed valid bonds to be returned to SBI, with the amount refunded to the purchaser
This landmark verdict restored transparency as a constitutional requirement in political funding and directly led to the revival and resurgence of electoral trusts as the primary lawful channel for corporate and institutional political donations. Unlike electoral bonds, electoral trusts mandate full disclosure, aligning political finance with democratic accountability.
Case Title:
Association for Democratic Reforms & Anr. v. Union of India & Ors.
Writ Petition (C) No. 880 of 2017
READ JUDGMENT
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