The Hindu : National : Chidambaram for effective regulation of foreign funds

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Sunday, Jun 26, 2005

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Chidambaram for effective regulation of foreign funds

Special Correspondent

"NGOs should guard against diversion or misutilisation"

NEW DELHI: Finance Minister P. Chidambaram on Saturday called for "effective regulation" of foreign funds in view of serious security and economic risks, and exhorted non-governmental organisations to ensure that such inflows were not diverted or misutilised.

While there were 30,000 organisations registered under the Foreign Contribution Regulation Act, only 16,000 duly reported the flow of funds amounting to Rs. 5,000 crores annually. "If 16,000 organisations accounted for Rs. 5,000 crores, an equal amount must be going unreported." This had serious security and economic implications.

"Accounting of such flow of funds should not be construed as intrusive or invasive." This became necessary, as 50 per cent of the NGOs did not report the funds received from abroad.

Mr. Chidambaram was delivering the valedictory address at the two-day seminar the FCRA here.

Conceding that some of the NGOs were doing yeoman service, he maintained that accounting and reporting of funds received was important, particularly in this era of globalisation.

The seminar was organised within a few days of the Government deciding to set up a Group of Ministers (GoM) to revamp the FCRA. The existing legislation failed to check overseas funding of anti-national organisations.

Mr. Chidambaram said the flow of funds two decades ago was usually in public accounts as it was from one government to another. Now, much of the funds came by way of private capital flows. Hence the need for careful regulation.

Any strategy to counter anti-national activities such as terrorism would have to break the foreign funding chain, he said. The FCRA was one such law, which protected the interests of the country by preventing the misuse of foreign funds, he said.

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