The Supreme Court upheld the 2020 amendments made to the Foreign Contribution (Regulation) Act 2010, which introduced restrictions in the handling of foreign contributions by organizations in India.
Key changes introduced in the amended Act 2020:
- Prohibiting public servants from receiving foreign contribution
FCRA earlier prohibited judges, Government servants and employees of Government owned or controlled corporations or bodies, from receiving foreign contribution.
The amended act has expanded the list of persons, who are prohibited from receiving foreign contributions. It has added “public servant”, as defined in Section 21 of the Indian Penal Code, 1860 to this list.
Public servant includes any person who is in service or pay of the government or remunerated by the government for the performance of any public duty.
- Prohibition on transfer of foreign contribution
The earlier Act permits transfer of foreign contributions to others, registered under FCRA or who have obtained prior permissions under FCRA for receiving foreign contributions. Also, under the current rules, a foreign contribution recipient, can, with the prior approval of the Government, transfer a part of such foreign contribution to any other person, who does not have a registration or permission under FCRA.
The amended Act prohibits persons authorized under FCRA to receive foreign contributions, from transferring such foreign contributions to any person.
- Lowering of the administrative expense cap
Until now, recipients of foreign contribution could use 50% of the foreign contribution to defray administrative expenses.
The amended act decrease the cap on administrative expenses through foreign contributions to 20% from the existing 50%.
- Power to prohibit a foreign contribution recipient from utilising/receiving its funds
Such a restriction can be imposed by the Government, pending further inquiry and before a person is found guilty of such contravention.
Prior to the amendment, imposes such a restriction, only when such a person is found guilty of an FCRA contravention.
- Mandatory opening of FCRA bank account in State Bank of India, New Delhi
The amended Act requiring the recipient of foreign contribution to receive such amount, only in an account designated as “FCRA Account”, opened in a branch of the State Bank of India at New Delhi.
However, it provides flexibility to the recipient, to also open another FCRA Account in any of the scheduled banks in India, for the purpose of keeping or utilising the foreign contribution, which has been received from its “FCRA Account” in the branch of State Bank of India at New Delhi.
- Mandatory identification requirements
The Act introduces a new provision in the FCRA, enabling the government to require any person, who applies for a permission or registration under FCRA or its renewal, to provide Aadhaar cards of all its office bearers or directors or other key functionaries or, in case of foreigners, a copy of passport or overseas citizen of India card.
The purpose of this amendment appears to be two-fold:
- For the Government to have a database of who are the persons in control of organizations receiving foreign contributions and,
- To further promote the popularity and usage of the Aadhaar card.
- Increase in the maximum limit for the period of suspension
The Act has been amended to give the government power to suspend the registration certificate of a person for up to 360 days, pending an inquiry for cancellation of FCRA registration.
What is FCRA?
- FCRA stands for foreign contribution regulation Act. The act was enacted in 1976 and amended in 2010 and 2020.
- The main purpose of this act is to regulate foreign donations and ensure that it has nothing to do with threats to internal security.
- This rule applies to all individuals, organizations, associations, groups, or NGOs that are receiving or are expecting to receive foreign donations.
Feature of the FCRA 2010
- Foreign funding of persons in India is regulated under FCRA act and is implemented by theMinistry of Home Affairs.
- Individualsare permitted to accept foreign contributions without permissionof MHA. However, the monetary limit for acceptance of such foreign contributions shall be less than 25,000.
- The registration certificate to any organization was only valid for 5 years and after the competition of five years, they had to register themselves again.
What was the Need for This Amendment?
- The main objective of this act was to control the misuse of foreign money for religious conversion. Other important objectives are to prevent the loss of GDP, account for transparency and accountability of the organization receiving foreign contributions, and to regulate NGOs
- The need to regulate foreign contributions coming into India, was felt soon after independence, when foreign funded NGOs began mushrooming in India. It was felt then that, foreign contribution which was motivated by political or religious objectives, needed to be curbed.
- The current Government has observed that, the annual inflow of foreign contribution has increased over the last 10 years, and that many recipients of foreign contribution, have it is noticed, have diverted funds for purposes, other than those, mandated by their respective FCRA registrations/permissions, and hence the amendment.
Issues Associated with the FCRA
- The bill is expected to impact the livelihood of the workers associated with NGOs and affect their performance.
- This act would put excessive regulation over the civil society organizations and educational research institutions.
- This act is incompatible with International Law as the United Nations Human rights council says that no law can restrict the activities of a person in the origin of funding.
- This act would restrict the operation of the NGO and would severely discourage their social work.
- This act would reduce foreign investments.
- This act is also against India’s international legal applications and the constitutional provision that states that it accepts the right to freedom of different associations and expression.
- Ever since independence, the NGOs have played a vital role in India. They have reached out to the marginalised communities and far off areas in India in multiple ways. Even during the ongoing COVID-19 pandemic, the relief work done by the NGOs was lauded by the Prime Minister of India.
- NGOs are helpful in implementing government schemes at the grassroots. They fill the gaps, where the government fails to do their jobs.
- The government must stick to the ancient Indian ethos of Vasudhaiva Kutumbakam as the framework for its global engagement and should not act with vendetta against the NGOs who criticize it’s working.
- Seamless sharing of ideas and resources across national boundaries is essential to the functioning of a global community, and should not be discouraged unless there is reason to believe the funds are being used to aid illegal activities.