MHA puts funds squeeze on intl NGOs

NEW DELHI – The Ministry of Home Affairs (MHA) has put on hold giving clearance to donations foreign NGOs wire to the bank accounts of their registered branches in the country, as officials suspect that the funding route can be used for money laundering and is also against the nation’s interests, media reports said on Monday.

Recently, Minister of State for Home Mullappally Ramachandran decided to have a re-look at the Foreign Contribution (Regulation) Act (FCRA), 2010, which allows foreign charities to fund their chapters working for social causes in the country. What prompted the ministry to have more filters in the law, Deccan Herald quoting government sources said, are provisions by which mother organisations are holding 99 per cent shares in their offshoots registered here.

The Home Ministry’s last month decision to keep in abeyance applications from subsidiary NGOs seeking prior permission for taking donations has impacted organizations like Medecins Sans Frontiers, Absolute Returns for Kids and Marie Stopes International. 

However, the ministry has not got anything adverse against these foreign charitable organisations and their subsidiaries so far, clarified government sources.

The FCRA regulates foreign funding to organizations in the country. Built into this act is also the notion that the branches would remain autonomous of any foreign control. But, the ministry is of the view that the NGOs operating here would lose their sovereignty and independence and function as per the dictate of foreign entities holding 99 per cent shares in their organisations, government sources stated. As per ministry estimates, foreign funding to the tune Rs 10,000 crore comes to India annually.

Home Minister Sushilkumar Shinde had agreed to a proposal for taking views of ministries of finance, law, corporate affairs and intelligence and investigating agencies over the need to amend the FCRA to plug loopholes that are being perceived to be vulnerable to abuse by foreign intelligence agencies. Globally, NGOs have often been used as fronts by state actors for discharging undercover duties.

Explaining it further, a government official said the funding mechanism can also be a convenient channel for recycling tainted money since at the most NGOs have to be opened at the two ends for cash transfer.

Prime Minister Manmohan Singh had said in an interview, published in a foreign science journal in February, that, “there are NGOs, often funded from the United States and Scandinavian countries, which are not fully appreciative of the development challenges that our country faces”. The PM’s remark that generated a lot of heat in the social sector was interpreted as foreign hand was fueling people protest against Koodamkulam nuclear plant in Tamil Nadu.

Government sources said the ministry should take the policy decision in this regard at the earliest to avoid harassment to genuine NGOs as social schemes might have been stuck due to the latest move to add more teeth to FCRA.

Mullappally Ramachandran had opted for some out-of-the-box thinking when his ministry denied prior permission to Institute for Policy Research Studies for taking donation of $ 15,55,000 from two US-based organizations –Ford Foundation and Omidyar Net Work – to provide research support to legislators.

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