'Hearing on curbs on US NGO unlikely to hurt bilateral ties'

 The unusual move by a powerful Congressional committee to hold a hearing on restrictions faced by an American NGO in India is unlikely to hold hostage the Indo-US relationship which has seen an upswing over last one decade, sources have said.

"Congressional hearing focused on a narrow issue of problems faced by one NGO in India due to noncompliance of rules/regulations will not help resolution of issue. Compassion International needs to ensure due compliance to Indian rules/regulations rather than resort to open hearing route," an informed Congressional source told PTI here on the condition of anonymity on the eve of the hearing.

In its latest blog, Compassion International said in 2011, the Indian government made significant changes to the Foreign Contribution Regulation Act (FCRA), which is the law that regulates NGOs' receipt of foreign funds into the country.

The Indian Government has denied these allegations and has asserted that its policies initiated in 2011 is not aimed at one particular NGO but is asking them to comply by the rules and regulations of the country.

Responding to a question on its impact on India US relationship, sources said it is important to look at the bigger picture of strong bipartisan support enjoyed by India-US relations in US polity and not hold it hostage to one single issue of problem faced by one NGO in India.

More than 30,000 NGOs in India are registered under the Foreign Contribution Regulations Act (FCRA) 2010.

On violation of FCRA rules, the foreign donor is put under Prior Reference Category, which implies that as and when the foreign donor wants to transfer the money to some recipient association in India, the same needs prior clearance from Ministry of Home Affairs (MHA), an informed source said.

As per available information, until August 2014, Compassion International (CI) was transferring funds to channel partners through two FCRA-registered societies – Caruna Bal Vikas (CBV) and Compassion East India (CEI).

However, this arrangement was changed after certain taxation issues were raised by IT Department regarding operations of CBV.

CI started transferring funds directly to partner organisations and also engaged a consultancy firm – Adhane Management Consultants (P) Ltd to oversee its South India operations.

On February 19, 2016, CI was placed under Prior Approval Category (PAC) by MHA on the two grounds: First it transferred funds to some associations which are not
FCRA-registered and secondly some of the other recipients utilised the funds received for the objectives contrary to the provisions of FCRA 2010.

This was done by Compassion International to avoid the tax being levied on their contributions, the source said, adding that the charitable activities of NGOs are exempt from tax whereas religious activities are not.