Published on Rediff 17th May 2011
The Foreign Contribution Regulation Act was passed in 1976. It seeks to regulate receipt of funds by non- governmental organizations (NGOs). It is managed by the Union ministry of home affairs.
Any organization that wants to receive contributions from abroad has to apply and get approval from the home ministry.
All remittances are received into a single bank account of a scheduled bank. The NGO has to annually submit audited receipts and payments account, balance sheet, etc to the home ministry.
The ministry scrutinizes the returns to ensure that contributions received for a particular purpose are used for that purpose only. It does a detailed check of randomly picked associations and then collates the data received to present the FCRA Annual Report, i.e. uploaded on the ministry's web site here.
As on March 31, 2009, there were 36,414 registered associations under FCRA. These organization could be religious, social, educational, cultural and educational organizations.
Why do we need to analyze inflows under FCRA?
Because of the sheer magnitude of inflows. Reported inflows into India were $2.4 billion in 2008-09, $2.15 billion in 2007-08 and $2.45 billion in 2006-07.
Reported contributions received from 1993-94 to 2008-09 were to the tune of Rs 84,182 crore (Rs 841.82 billion). Actual are much higher.
Read the complete story on : http://www.rediff.com/business/slide-show/slide-show-1-why-more-scrutiny-of-foreign-funds-to-ngos-is-needed/20110517.htm
Food for thought
NGOs are required to file their accounts by December 31 of the subsequent year. The FCRA report for year ended March 31, 2009 was signed in December 2010, i.e. nearly 12 months after the due date of receipt. So either NGOs filed reports late or there was a delay at the ministry of home affairs. Either way a delayed report has historical value.
NGOs should file their audited accounts within six months of March 31 so that FCRA report is ready by December. The MHA site now allows NGOs to file returns electronically, a welcome move. It should help in speedier consolidation.
Since 45 per cent of the NGOs have not filed audited accounts, any NGO which does not file accounts for two years should not be allowed to receive further remittances. The bank branch that is authorized to receive remittances should be empowered to ask the NGO for proof of filing annual return.
Is the field inspection of books of accounts of a few NGOs good enough to monitor the activities of over 36,000 NGOs country wide who receive in excess of $3 billion annually?
Since that does not seem to be the case, should the ministry of home affairs involve the home departments of respective states? The ministry of home affairs sources say that states have refused to co- operate. The issue should be resolved through a dialogue between the ruling and the opposition parties.
The deeper intent behind the Western world remitting thousands of crores (billions) into India annually needs to be probed and acted upon. After all poor people live in the West, the East and also in the Middle East.
More importantly should a country growing at 8 per cent-plus per year allow Western NGOs to have such a toehold in India?
Would the United States, Germany, the Netherlands, the UAE, and the UK allow Indian NGOs similar freedom as does the government of India?
Speaking in the Rajya Sabha in 2010, whilst moving certain amendments to the FCRA, Home Minister P Chidambaram said that the government would like to ensure "that the foreign money does not dominate social and political discourse in India. There is enough money within India."
Intent exists! However, India needs to improve the monitoring mechanism for funds received.
