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

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