Govt quietly amends law to save BJP (& Cong) from FCRA mess

arya sharma/catch news

Govt quietly amends law to save BJP (& Cong) from FCRA mess

The case

  • The BJP and the Congress were on the hook for violating the Foreign Contribution (Regulation) Act
  • Both had accepted donations indirectly from UK multinational firm Vedanta

The move

  • The BJP govt at the Centre has quietly amended the law to save the two parties
  • Arun Jaitley's Finance Bill retrospectively reclassifies foreign donations as 'Indian' under certain criteria

More in the story

  • The criteria under which foreign money can be called 'Indian'
  • Why the move is worthy of criticism

Ever since the BJP has come to power at the Centre, it has adhered to the strategy of labelling foreign-funded institutions and NGOs as 'anti-nationals', working to promote the interests of foreign countries.

But the ploy seems to be more of an attempt to safeguard itself, since the party receives the highest amount of foreign funding in the country.

According to a news report by The Wire, "the Modi government has quietly moved to let the Bharatiya Janata Party and Congress off the legal hook for violating the Foreign Contribution (Regulation) Act, 2010, when they accepted donations from the London-based multinational, Vedanta".

Also read - Name one thing common between BJP and Congress: Foreign funds

The government has made the changes in the law to escape a 2014 Delhi High Court ruling in 2014 that indicted BJP and Congress for violating the FCRA, and ordered the government and the Election Commission to act against them.

How the change was brought about

The Centre moved the Supreme Court, and the matter is now pending, but Finance Minister Arun Jaitley has cleverly tried to change the law of the land by inserting an additional clause in the Finance Bill, as part of this year's Union Budget.

The new clause retrospectively amends the FCRA to redefine foreign companies as 'Indian' companies, thus nullifying the illegality that the BJP and Congress committed when they took money from Vedanta.

The BJP and the Congress were both found to have accepted donations from London-based MNC Vedanta

The amendment to the FCRA in the Finance Bill says: "In the Foreign Contribution (Regulation) Act 2010, in section 2, in sub section(1), in clause (j), in sub-clause(vi), the following proviso shall be inserted with effect from 26 September, 2010, namely:-

'Provided that where the nominal value of share capital is within the limits specified for foreign investments under the Foreign Exchange Management Act, 1999, or the rules and regulations made thereunder, then, notwithstanding the nominal value of the share capital of a company being more than one half of such value at the time of making the contribution, such company shall not be deemed a foreign source'."

History of the FCRA

The FCRA was first enacted in 1976. In 2010, the Act was amended to expand its scope. According to this law, political parties and their office bearers can't accept any foreign contributions.

Lawmakers, candidates for any election and organisations of a political nature are also among those barred from being able to accept foreign contributions.

Political parties in India are completely exempt from income tax. To claim this exemption, however, they need to furnish a list of all donations above Rs 20,000 to the Election Commission of India (ECI).

In 2013, the Union government notified a scheme to let corporates set up electoral trusts for contributing to political parties. Upon scrutinising the donation reports submitted by political parties, it was noticed that some parties had declared donations received from electoral trusts.

Among the parties who had received donations from electoral trusts were the BJP and the Congress. Both had declared receiving funds from one particular trust, set up by three companies.

According to the websites of the companies, all three are fully-owned subsidiaries of a company registered in the United Kingdom. Thus, under the 'trust' veil, money received by the two parties was, in fact and in effect, foreign contributions. Therefore, both were in violation of the FCRA.

Criticism of the government

The government has used the FCRA as a tool against those it considers antagonistic to it. It has even gone ahead to allegedly harass dissidents by stringently implementing the legislation.

For instance, this government has waged a sort of 'FCRA war' against activists Teesta Setalvad and activist-lawyer Indira Jaising, both of whom are its outspoken critics and also dragged it to court on many occasions.

The govt has used FCRA as a tool to go after its critics like Teesta Setalvad and Indira Jaising

But when it comes to the party running the government, it has retrospectively amended the law to keep the BJP out of the legislation's ambit. Of course, the government has the power, and is well within its rights to do so. But the move reeks of political immorality.

Reacting to the news, the Aam Aadmi Party (AAP) has slammed the BJP for getting the government to change the law.

"Mr Jaitley's desperate move to quietly amend the FCRA is one of the worst examples of political opportunism, which is clearly aimed at saving the BJP and Congress from the action sought against these two parties by the Election Commission," a party press release said.

Prof. Jagdeep Chhokar, founder of the Association for Democratic Reforms, adds: "This is a blatant act on the part of the government. The government has done it two save two major political parties of the country, including the one to which it belongs (BJP)."

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