New Law Clears Political Parties That Illegally Took Foreign Funds

New Delhi: Political parties have been exempted from scrutiny regrading funds they may have received from abroad over the last 42 years. A controversial bill that made this official was one of the 218 amendments passed on Tuesday by the Lok Sabha without debate. The new rule is among a series of measures, that critics say, will make the sources of political funding more opaque.

The Representation of the People Act, which lays down the rules for elections, bars political parties from accepting foreign funds to stave off the possibility of foreign influence on the government. But as the economy opened and foreign investments became sought after for industry, amendments were made in 2010 to the Foreign Contribution Regulation Act, making foreign contributions to political parties legal.

The latest amendment in the Finance bill 2018 ensures that contributions from abroad to political parties before 2010 will not be considered illegal under the Foreign Contributions Regulations Act. The new rule places foreign contributions since 1976 outside scrutiny. In effect, it makes political parties accepting it, immune from the law.

The amendment was supported by both ruling BJP and the opposition Congress.

Both parties were found guilty of illegally accepting foreign funds by the Delhi High Court in 2014 following a petition by the election watchdog body, Association of Democratic Reforms. Between 2004 and 2012, Vedanta Resources Plc, then a London-based group, allegedly donated 879 lakh to Congress and 790 lakh to the BJP through its Indian subsidiaries.

The reprieve for political parties comes in the backdrop of a huge government crackdown on non-profits over violations of the foreign contribution rules. Till last year, hundreds of non-governmental organisations -- including prominent one like Greenpeace and Teesta Setalvad's Citizens for justice --  have been pulled up for allegedly violating the law.

Last year, changes in the FCRA Act as part of the Finance bill had eased corporate donations to political parties, scrapping a ceiling for contributions and making it inessential to record the name of the recipient.