Yet another proposal to amend FCRA !?

May 2, 2005

Dear FORUM,

According to a news-report, there is now another proposal to amend the Foreign

Contribution (Regulation) Act(FCRA). The objective is to prevent 'massive

diversion of foreign funds by NGOs'.

The latest proposal involves the following changes:

1. Making it mandatory for banks to report on transactions

2. Setting up five regional offices of FCRA to improve enforcement

3. Review of FCRA registration every five years

According to the Minister of State for Home, Shri Sriprakash Jaiswal, 'the aim

is to ensure that funds are received and used by the right people and is used

for the specified purpose, the changes will not make receiving foreign funds

more difficult.'

No one will disagree with the sentiments of the Honourable Minister.

However, FCRA was not designed to ensure that NGOs use their funds properly. It

was designed to ensure that foreign funds are not used to influence Indian

electoral politics. Therefore, if the Ministry is now getting interested in the

proper use of funds by NGOs, then this is a significant change indeed.

According to the report, the Home Minister, Shri Shivraj Patil has cleared the

proposed changes. A note will be put up to the cabinet soon.

After that, the Parliament is likely to be informed in the current session.

It is said that history repeats itself. There have been several such proposals

in the past: in 1988, then in 1996, again in 2002 and now in 2005. None made it

to the Parliament. Let us see whether this proposal fares any better.

[References:

FCRA: Foreign Contribution (Regulation) Act, 1976. Applicable in India 'Centre

to scan flow of funds to NGOs', p.4, Indian Express, New Delhi, 1-May-2005]

2-May-05. Cross Posted:AccountAid

Forwarded by :

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A. SANKAR

Executive Director

EMPOWER, 107J / 133E, puram

TUTICORIN-628 008, INDIA

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