Kerala floods
An aerial view of the flood-hit Kerala, on Aug 16, 2018IANS

Kerala faced one of its biggest challenges for the past two weeks when the entire state was flooded due to excess rain, overflowing rivers and the opening of dames which weren't opened for decades. Hundreds died and over 2 lakh people were displaced. Homes and properties were destroyed.

One of the most considerable donations the state received was from the United Arab Emirates. Sheikh Mohammed bin Zayed bin Sultan Al-Nahyan, the Crown Prince of Abu Dhabi, offered India financial aid of Rs 700 crore. He also tweeted that a national emergency committee to oversee and assist in relief in the state.

An ongoing debate after the announcement by Kerala Chief Minister Pinarayi Vijayan about the financial fund was whether the Indian government would accept the financial aid given by the Gulf country.

The country has not accepted any foreign financial aid since the 2004 tsunami where the death toll went up to thousands and almost 6 lakh people were displaced. The country also rejected foreign assistance during the 2013 Uttarakhand floods.

While there is no official announcement yet, ongoing debates suggest that India would not accept the financial aid offered by UAE. Here are the reasons why Rs 700 crore might not be accepted.

1.      Continuing what the then Prime Minister Dr Manmohan Singh said in 2004, the subsequent government also feels that India is capable of handling the situation on its own without any external assistance.  

2.      A senior member of the Ministry of External Affairs was quoted by NDTV as saying, "If foreign aid is coming to non-profits or NGOs which are registered under the Foreign Contribution (Regulation) Act (FCRA) then they will not be taxed. But if donations are received by NGOs which are not registered, then it is counted as the income of the NGO and that will be taxed". The MEA has accepted donations of Indians abroad since it is tax-free, according to the HuffPost but there is no provision which states that there will be any tax if the UAE sends money if it is a direct bank transfer.

3.      An Indian Express article said that if the government accepts financial help from one country, they will be obligated to accept the money from other countries as well.

4.      Another point brought up by the Indian Express is that India now sees itself as an economic donor and couldn't possibly accept foreign financial aid.  

5.      The Week suggests that there is no provision for the Indian states to seek financial aid from foreign countries. It goes on to say that India can only accept the money as a loan and this loan will add to India's debt.