The US, UK and Germany are the biggest donors for Indian voluntary sector, but contributions from smaller countries like Luxembourg and Liechtenstein are on the rise.
Latest data available with the home ministry on annual donor wise details show annual donations from these two countries, known as tax havens, has increased between 70% to 90 % between 2006-07 and 2008-09.
Luxembourg, a country with a population of five lakh and spread in an area of 2,586 sq kms, donated Rs13.44 crore in 2006-07. In 2008-09, the annual donation from there to Indian NGOs increased to Rs23.30 crore despite the country fighting with debt-ridden economy.
Donations from much smaller Liechtenstein having population of 35,000 people were relatively less. In 2006-07, it was Rs3.58 crore, which increased to Rs6.36 crore in 2008-09.
In comparison, donation from the US increased from Rs2,949 crore to Rs3,433 crore and from UK dipped from Rs1,427 crore to Rs1,114 crore during the same period. Money from other European nations witnessed an increase of less than 5%.
India in 2009 had received a list of 15 persons from the German government who has alleged black money stashed in LGT banks in Liechtenstein under the India-Germany DTAA. Assessments have been made against total 18 individual and penalty proceedings for concealment of income have separately been initiated in the cases.
The sharp spike in FCRA inflow from tax havens raises suspicion about ‘round tripping’ of black money by Indian entities. Round tripping refers to routing of investments by a resident of one country through the other country back to his own country.
Another surprise package in the list of donor countries was Grenada, an island nation in Caribbean Sea. It gave Indian
NGOs a whooping Rs332.89 crore in 2006-07. The funding diminished in subsequent years with Rs35.99 lakh in 2007-08 and
Rs1.67 lakh in 2008-09, as per March 2011 data.
The home ministry, which regulates foreign funding to voluntary sector through the Foreign Contribution Regulation Act, does not probe the source, but only whether the money is spent as per norms. “We can investigate only spending,” an official said.
With inputs from Gaurav Choudhury