[Source: Reuters]

India’s Supreme Court on Thursday scrapped a seven-year-old election funding system that allows individuals and companies to make unlimited and anonymous donations to political parties, calling it “unconstitutional”.

The decision is seen as a setback for Prime Minister Narendra Modi’s Bharatiya Janata Party, which has been the largest beneficiary of the system it introduced in 2017.

The system, called Electoral Bonds, was challenged by members of the opposition and a civil society group on the grounds that it hindered the public’s right to know who had given money to political parties.

Under the system, a person or company could buy bonds from the state-run State Bank of India (SBI.NS), opens new tab and donate them to a political party.

Individuals and companies bought 165.18 billion rupees ($1.99 billion) of such bonds in total up to November 2023, according to the Association for Democratic Reforms (ADR), a non-government civil society group working on election funding in India.

The group was a petitioner challenging the system.