Money trail: Can Indian NGOs continue to get foreign funds?

New regulatory mechanisms and a blacklist of 77 NGOs have enabled much more stringent regulation of foreign funded NGOs.

Pallavi Polanki March 15, 2012 10:42:02 IST
Money trail: Can Indian NGOs continue to get foreign funds?

New Delhi: When the Prime Minister went public with his discomfort about the foreign funding of NGOs in matters sensitive to India’s economic growth, he was alluding to a new regime of regulatory mechanisms being put in place to up the vigilance on anything foreign to do with NGOs.

The Prime Minister made these comments in the context of public protests against the Russian-built Koodankulam Nuclear Power Plant in Tamil Nadu, where he pointed fingers at NGOs based in the US for supporting the protests. Following the PM’s statements, the bank accounts of four NGOs in Tamil Nadu had been frozen with the Home Ministry accusing them of diverting funds to fuel the agitation.

The new regulatory mechanisms include the new and more stringent Foreign Contribution Regulation Act (FCRA), 2010 which came into effect as of 1 May 2011 to regulate funding from abroad to Indian NGO's. (The act replaced the FCRA, 1976). In addition to this, a watchlist of 77 international NGOs working in India has been circulated to Indian missions abroad for ‘appropriate action.’

Money trail Can Indian NGOs continue to get foreign funds

AFP

According to a senior official in the Ministry of External Affairs (MEA), the list of 77 - all of them international NGOs mostly from the US and Europe - was issued last year.

Speaking on the condition of anonymity, the MEA official said, “The list of 77 NGOs was prepared on two grounds, One, financial irregularities, and two, the kind of work that was being conducted using these funds were not above board - this includes surrogacy, creating social unrest and so on. This list was issued by the money laundering committee and home affairs last year.”

Does this signal a change in the climate for international NGOs operating in India and will this mean that its going to become more difficult for Indian NGOs to get foreign funding? Insisting that this was merely a ‘firefighting exercise’, the senior official said, “Over 2000 international NGOs are operating in India. The top ten get almost 40 per cent of the funds. That is not going to change. The 77 that are on the list are not major players.”

As far as foreign funding of NGOs goes, the FCRA wing of Home Ministry, in no uncertain terms, lays down the new ground rules for NGOs receiving money from abroad. It says, “…the FCRA, 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent misutilisation of the foreign contribution received by the associations….The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that individuals and organisations may function in a manner consistent with the values of the sovereign democratic republic.”

The new FCRA regime has not gone unnoticed by the international community. United Nations Special Rapporteur Margaret Seggakya has, in a report submitted at the ongoing session of the United Nations Human Rights Council in Geneva, expressed “concern” about the new law, observing that some of its provisions “may lead to abuse by the authorities when reviewing applications of organisations which are critical of authorities”.

Acording to the Home Ministry’s latest annual report (2009-2010) on ‘Receipt and Utilisation of foreign contribution by voluntary organisations’, indicate that only 38346 NGOs registered under the Act receive foreign contributions, a number that is less than 2 per cent of the total NGOs registered – estimated at over 20 lakh – in India.

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