View of Home Ministry
The Home Ministry wants the Finance Ministry to surrender its powers to monitor non-governmental organisations (NGOs) under the Foreign Exchange Management Act (FEMA). A Home Ministry official said the idea is to bring all NGOs which receive foreign contributions under one umbrella for better monitoring and regulation.
Explanation for such view
Currently, there are nearly 100 international NGOs and associations which receive foreign funds through their liaison offices and disburse them to NGOs across India. International donors such as the Ford Foundation, the U.K.’s Department for International Development and Canada’s International Development Research Centre are registered under FEMA but not the Foreign Contribution Regulation Act (FCRA), 2010.
The Home Ministry monitors foreign funds donated to NGOs and organisations through the FCRA.The number of NGOs registered under the FCRA is 33,000 and last year alone the FCRA registration of nearly 10,000 NGOs was cancelled for not following norms.There are certain NGOs which are registered under FEMA and continue to disburse foreign funds to various associations here. Since FEMA is regulated by the Finance Ministry, there are many occasions when MHA is not able to monitor the flow of funds effectively.
Since there is a separate law — the FCRA — to deal with such transactions, it will be better if they are brought under a common head.
Objective of FCRA
The FCRA was brought into force to regulate flow of foreign funds to voluntary organisations with the objective of preventing any possible diversion of such funds to anti-national activities.
Stringent norms under FCRA
An official explained that many NGOs and foreign donors do not want to register under the FCRA due to its stringent provisions.