CAN INDIA NOT DEVELOP WITHOUT FOREIGN FUNDS?

CAN INDIA NOT DEVELOP WITHOUT FOREIGN FUNDS? Has this option been examined?

Who took the decision to allow FOREIGN FUNDING FOR NGOs & CORPORATE SECTOR?

Why were legislations like societies registration act, 1860 and Indian Trusts Act, 1882 enacted by the British Parliament? Was it done to serve the interest of Indians?

Will someone examine the proceedings of the British Parliament to ascertain the real motive?   

NGOs were created post 1860 to fragment people's anger at the various ventures of government and companies.

Before Indian National Congress was formally in 1885 (which functioned under the tutelage of British Committee on Indian National Congress) it functioned through NGOs like Land Holder’s Society, Bengal British India Society, Bombay Association and Madras Association etc.

There is also a need to trace the first few official decisions of Government of India to allow flow foreign money in India post independence and prior to independence.

Is it not in national interest to do away with Foreign Exchange Management Act (FEMA), 1999 and Foreign Contribution Regulation Act (FCRA), 2010 and enact Prohibition of Flow of Foreign Money Act?

Which law in India regulates flow of funds from international financial institutions like World Bank Group?

Shouldn't the upcoming budget to be presented by Arun Jaitley, the finance, corporate affairs and defence minister provide an account of projects supported by World Bank Group besides an account of foreign and domestic allocations for Indian NGOs, foreign NGOs, Indian companies and foreign companies because it is deeply linked to national security?

Regulation and ‘management’ of foreign money

Regulation or ‘management’ of foreign funds is underway but legislatures, state governments and central government are yet to reveal how they plan to regulate funds from International financial institutions (IFIs) and how to bring it under legislative scrutiny.  The issue of dual approach with regard to foreign funds, foreign direct investments and foreign institutional investors merits attention.   

 

The regulation and management of foreign money which comes to various organisations and institutions with the opening up of the Indian markets and economic reforms has confronted the central government with regulatory challenges since 1990s. The distinction between foreign and local has become almost redundant. But Government of India is pushing a dual policy in terms of dealing with “for profit sector” and “non-profit sector”. While in the domain of “for profit sector” it has shifted from a regulatory paradigm to a ‘management paradigm by replacing Foreign Exchange Regulation Act (FERA), 1974 into Foreign Exchange Management Act (FEMA), 1999 but in the “non-profit” arena it continues with the regulatory paradigm and replaced Foreign Contribution Act (FCRA), 1976 by FCRA 2010 and FCRA Rules 2011.

It is evident that while Government of India has abdicated its role of regulator ‘for profit’ funds which it considers essential for the future growth of the country but it views foreign funds for “non-profit purposes as against public interest and thus suspects” them. The ‘not for profit sector’ and the regulation of their registration and inflow of foreign funds under FCRA is done through the Union Ministry of Home Affairs. But ‘for profit sector’ it is Union Ministry of Finance which is mandated to facilitate the inflow of foreign funds under FEMA. This raises questions of ‘equality before law’.    

The ‘not for profit sector’ receives support for carrying out their activities from various sources including membership fees, funds from government and corporate entities, individual donations, family wealth, national and international foundations. 

Out of millions of voluntary organizations ‘not for profit sector’ in India 22,735 organizations received Rs. 10,335 crore as foreign funds for ‘non-profit’ purposes during the year 2010-11, less than 5 % of the Rs 173,900 crore (36.5 billion USD) foreign funds (FDI equity inflows) into our economy ‘for-profit’ purposes during during 2011-2012. To regulate and hold Civil Society organisations government has made various mandatory provisions from registration under various acts, to filing income tax or seeking non-profit status.

Both FCRA Act, 2010 and FCRA Rules, 2011 impinge upon the democratic space and activities of ‘non-profit’ associations that receive foreign funds. This squeezes the space for dissenting views and carrying out democratic activities. It infringes upon constitutional rights like ‘freedom of association’ and ‘freedom of expression'.

In last couple of years several cases of such misuse have come to the fore where by the FCRA registration of various voluntary organizations have been suspended or cancelled for their  expression of solidarity with actions pertaining to people’s causes.  

Provisions under FCRA have banned a wide spectrum of democratic voluntary organizations from getting foreign aid which hold opinions different from that of the government on various critical matters of public interest and/or express solidarity in any manner (i.e. issuing statement/sharing infrastructure/participation etc.) with people’s actions to defend their constitutional rights. The framers of the provision envisage a situation where all the democratic voluntary organizations are turned into puppets for the ruling parties. In effect, these provisions are putting a pre-condition on democratic voluntary organizations to express their silent support for the views and ideas of the ruling parties to be eligible for getting funds of foreign origin. It may be noted that this pre-condition is not applicable to 'for profit' companies.   

The soul of parliamentary democracy lies in people’s right to question, make the government more and more accountable, form associations and push for their social and political empowerment. The FCRA rules mandates that “organisation of farmers, workers, students, youth based on caste, community, religion, language or otherwise, which is not directly aligned to any political party, but whose objectives, as stated in the Memorandum of Association, or activities gathered through other material evidence, include steps towards advancement of larger socio-economic or political interests of the organization” These will be termed political in nature and hence can't receive funds from foreign foundations or even associations of NRIs or Indians living abroad and sending money home for such activities.

Such a broad definition and application of law and such power to rest with some officials of Ministry of Home Affairs means that organizations of historically marginalised groups in this country like that of farmers, dalits, adivasis etc will never be able to access 'foreign' resources for their activities like seeking wider participation in social movements. Provisions like this are completely ultra vires to constitutional principles and ideals.

India currently has over 100 active project loans from the World Bank amounting to $21 billion in loans, none of which forms part of parliamentary scrutiny. A RTI application revealed that the funds for structural adjustments alone in the year 2009-2010 amount to Rs 1248 crores. This is almost double the previous financial year. Also, there are huge funds going to water resource management, energy, agriculture, infrastructure etc. In the past 10 years, India paid over 1000 crore rupees to the World Bank and ADB alone as commitment charge. Shouldn't all this be part of the parliamentary scrutiny or accounted in Union Budget? 

As a functioning democracy there is need for accountability on all front and at all levels, not selective applications of laws, primarily with the purpose of stifling dissent and democratic rights to form associations and work for people's cause. Given the massive impact of foreign money in the form of the loans, grants from World Bank, IFC, ADB or other bilateral agencies on the policy regime and governance mechanisms, the International Financial Institutions (IFIs) and foreign investors must be brought under parliamentary scrutiny to make them subservient to legislative will.