Loving and loathing of foreign donations

While we love FDI and remittances from abroad, foreign donations to civil society organisations are loathed and viewed with suspicion. Why is there a dichotomy in our perceptions?

Published: 21st January 2022 12:37 AM  |   Last Updated: 21st January 2022 12:37 AM   |  A+A-


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We love to receive funds from abroad. We are proud when India’s FDI inflows exceed China’s. We are happy to receive billions of dollars as NRI remittances. In the same breath, when civil society organisations (NGOs) receive donations from abroad, we loathe them, view them with suspicion and even ban them.

Why is there such a dichotomy in our perceptions?

For sure, the reasons are political or, rather, ideological, and not due to economics. A study of the policies pursued under the Foreign Contribution (Regulation) Act, 1976 (FCRA) and how they morphed over the years may be instructive.

The FCRA had its roots in the pre-Emergency era when the country was passing through political and social turmoil. Indira Gandhi was under attack and felt politically insecure. These were also the Cold War years when foreign intelligence agencies like the CIA, KGB, MI-6, etc., were rumoured to be engaging in disruptive activities by covertly financing politicians, parties, journalists and academics.

The IB had unearthed some instances of anti-national and disruptive character. Several reports of foreign “spying” made their way into the press and whipped up xenophobia. The government swung into action. The Ford Foundation was directed to wind up its operations.

Cultural centres attached to foreign missions were required to close down. Many like the British Council or Kennedy Centre chose to get integrated with their embassies. Behind all these convulsions, there emerged a national consensus to adopt legislation to regulate foreign contributions.

The FCRA Bill was introduced in Rajya Sabha on 24 December 1973 and forwarded to the joint committee on 19 February 1974. The committee held 33 sittings at different places and took the views of all the political parties and state governments. The Bill was passed by both the Houses a few years later. This is in sharp contrast to how the BJP rushes sweeping changes through both Houses without any discussion.

As long as the UPA was in power, the FCRA operated benignly with a broad mandate of national security. Once the NDA (BJP) came to power, the contents of what constituted “national security” changed drastically. The FCRA turned into a draconian instrument to push forward the ideology of the ruling party. It was also an instrument to silence activists.

The government cancelled the licenses of 20,000 NGOs. They were viewed by the Centre (home ministry?) as promoting anti-development negativism. Unfortunately, this is a charge that can be levelled against any genuine or well-meaning critic of the government’s policies. As there is neither transparency nor accountability, the affected parties have no recourse to justice.

A petition challenging this is pending in the Supreme Court. The government has argued that there is no fundamental right to receive foreign donations; the FCRA does not come under the Right to Information (RTI) Act as the home ministry has argued while answering a petition by a newspaper.

I may add here that I was handling the FCRA matters in the finance ministry when the debate was going on. When the Cabinet Paper for introducing the Bill came to us, I G Patel, then secretary, Department of Economic Affairs, doubted whether foreign interference could be controlled through the FCRA. However, he minuted that neither the finance ministry nor the banks should be involved in its administration. Thus, it was entirely left to the home ministry.

Once the BJP assumed office, it seized the potential of the FCRA and how its scope could be extended, and the rules and reporting requirements were tightened. Often for routine delays or errors, licences were cancelled. If the MHA on inspection of accounts and records finds any adverse inputs, it can suspend the license. The MHA’s sway over NGOs reached its apogee with the passing of the FCRA Amendment Bill, 2020. It was unanimously passed by the Lok Sabha on 21 September 2020 and the Rajya Sabha a couple of days later.

It is a body blow to the NGOs functioning in India. The apex body of Indian voluntary organisations VANI said it will be a “death blow to the development relief, scientific research and community work of the NGO community as it prohibits collaboration with other Indian organisations”. The International Commission of Jurists (ICJ) condemned the adoption of the Bill. The ICJ’s Policy Director Ian Seiderman said, “The spirit of the Bill is to stigmatise certain NGOs and lend credence to the authoritarian voices that have attacked them as ‘anti-national’.”

The BJP seems to have learnt from the bitter experience of the UPA government during its second term. Those years were rife with corruption or rumours of graft at high levels. The BJP highlighted this sordid record and assured the voters of a clean corruption-free government. It is quite likely that the government has been able to shut out all rumours. This has been through the ferocious enforcement of the FCRA. The corruption-free record has come with a tattered human rights reputation.

Kandaswami Subramanian (
Served in the Ministry of Finance, GOI, and retired as Joint Secretary


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  • Jayaram Guntupalli

    To draw a parallel between Foreign Direct Investment (FDI) in a business in India and unverifiable spending by the Non-Governmental Organizations (NGOs) in India is laughable at best. It is as simple as that. FDI in India is a business transaction that is open
    3 months ago reply
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