Government bid to allow foreign funding of parties

• The government has proposed an amendment with retrospective effect that will allow political parties to accept donations from overseas companies whose ownership of Indian entities is within the foreign investment limits prescribed for the sector.
• Until now, the Foreign Contribution (Regulation) Act, 2010, or FCRA, banned political parties from receiving funds from any foreign source. The original law defines "foreign source" to include any company with foreign investment of above 50 per cent
• The amendments were proposed by the Finance Minister in the Finance Bill as part of the Union Budget of 2016-17. The amendment is retrospective and will come into effect from 2010, when the FCRA was introduced.

About the Foreign Contribution Regulation Act (FCRA)

• The Ministry of Home Affairs is mandated to administer the Foreign Contribution (Regulation) Act, 2010, for regulating the receipt and utilization of foreign contribution by the associations/NGOs.
• Foreign Contribution (Regulation) Act (FCRA) introduced a list of individuals prohibited from accepting any type of foreign contribution: (a) candidates for election, (b) correspondents, columnists, cartoonists, editors, owners, printers or publishers of a registered newspaper, (c) judges, government servants or employees of any public sector corporation, (d) members of any Legislature, and (e) political parties or their office-bearers, (f)organisations of political nature and (g) any association or group engaged in the production or broadcast of audio or audio visual news or current affairs programmes through any electronic mode.
• The central government may also suspend for 180 days or cancel certificates of registration to receive foreign contribution in cases of false statements in applicant registration or renewal, violation of FCRA certification or the FCRA Act, or if the central government thinks it is in the public interest to do so.
• The Bill prohibits the transferring of foreign contribution by a registered organisation to an unregistered one. ? The Bill introduces a cap of 50% of foreign funds for administrative expenses. The government define what constitutes administrative expenses. This cap may be exceeded with prior permission
• The Government receives inputs from various security agencies, including Intelligence Bureau, from time to time, about the violations of FCRA, however, action is initiated against the alleged violators only after due scrutiny and following due process as prescribed in the said Act.
• If any NGOs/Civil Societies violate any of the provisions of the Act and Rules, then only, action is initiated as per provisions of Foreign Contribution (Regulation) Act, 2010. Actions include compounding of offence, putting in prior reference category, suspensions of registration, freezing of accounts, cancellation of registration, prosecution etc.

Analysis:

• The question of foreign funding to political parties has been looked upon with suspicion as it is considered as foreign interference or influence over the sovereignty of a country.
• This move raises its concerns about negative effects that foreign funding to political parties can have. It is hypocritical to welcome foreign funding for political parties who spend their money on campaigns and other miscellaneous costs which barely has any benefits for the society as a whole while blocking the same for NGO who could potentially use it for social causes.
• Corporate funding of political parties has already strengthened the corporate – politics nexus, the legalizing of foreign funding to political parties who score very less on transparency will be a step towards institutional corruption.

By: Vishal