Foreign Contribution (Regulation) Act (FCRA)

Context:

Recently, The Centre suspended the Foreign Contribution Regulation Act (FCRA) licence of the Centre for Policy Research (CPR).

• This came five months after the Income Tax department conducted ‘surveys’ on the premises of the CPR, Oxfam India, and the Independent and Public Spirited Media Foundation (IPSMF), which funds a range of digital media entities.

Relevance:

GS-II: Polity and Governance (Government Policies & Interventions, Non-Governmental Organisations -NGOs), GS-III: Indian Economy (External Sector, Mobilization of Resources)

Dimensions of the Article:

1. What is the FCRA?
2. Foreign Contribution (Regulation) Act, 2010
3. Foreign Contribution (Regulation) Amendment Act, 2020
4. Issues Related to FCRA

What is the FCRA?

• The FCRA was enacted during the Emergency in 1976 amid apprehensions that foreign powers were interfering in India’s affairs by pumping money into the country through independent organisations.
• These concerns were, in fact, even older — they had been expressed in Parliament as early as in 1969.
• The law sought to regulate foreign donations to individuals and associations so that they functioned “in a manner consistent with the values of a sovereign democratic republic”.

Foreign Contribution (Regulation) Act, 2010

The Foreign Contribution (regulation) Act, 2010 is a consolidating act whose scope is to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.

Key Points regarding FCRA

• Foreign funding of voluntary organizations in India is regulated under FCRA act and is implemented by the Ministry of Home Affairs.
• The FCRA regulates the receipt of funding from sources outside of India to NGOs working in India.
• It prohibits the receipt of foreign contribution “for any activities detrimental to the national interest”.
• The Act held that the government can refuse permission if it believes that the donation to the NGO will adversely affect “public interest” or the “economic interest of the state”. However, there is no clear guidance on what constitutes “public interest”.
• The Acts ensures that the recipients of foreign contributions adhere to the stated purpose for which such contribution has been obtained.
• Under the Act, organisations require to register themselves every five years.

Foreign Contribution (Regulation) Amendment Act, 2020

• The Act bars public servants from receiving foreign contributions. 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.
• The Act prohibits the transfer of foreign contribution to any other person not registered to accept foreign contributions.
• The Act makes Aadhaar number mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
• The Act states that foreign contribution must be received only in an account designated by the bank as FCRA account in such branches of the State Bank of India, New Delhi.
• The Act proposes that not more than 20% of the total foreign funds received could be defrayed for administrative expenses. In FCRA 2010 the limit was 50%.
• The Act allows the central government to permit a person to surrender their registration certificate.

Issues Related to FCRA

• The Act also held that the government can refuse permission if it believes that the donation to the NGO will adversely affect “public interest” or the “economic interest of the state” – however, there is no clear guidance on what constitutes “public interest”.
• By allowing only some political groups to receive foreign donations and disallowing some others, can induce biases in favour of the government. NGOs need to tread carefully when they criticise the regime, knowing that too much criticism could cost their survival. FCRA norms can reduce critical voices by declaring them to be against the public interest – Hence, it can be said that FCRA restrictions have serious consequences on both the rights to free speech and freedom of association under Articles 19(1)(a) and 19(1)(c) of the Constitution.
• In 2016, the UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association undertook a legal analysis of the FCRA and stated that restrictions in the name of “public interest” and “economic interest” failed the test of “legitimate restrictions” as they were too vague and gave the state excessive discretionary powers to apply the provision in an arbitrary manner.

On what basis is approval cancelled?

• The government reserves the right to cancel the FCRA registration of any NGO if it finds it to be in violation of the Act.
• Registration can be cancelled if an inquiry finds a false statement in the application; if the NGO is found to have violated any of the terms and conditions of the certificate or renewal; if it has not been engaged in any reasonable activity in its chosen field for the benefit of society for two consecutive years; or if it has become defunct.
• It can also be cancelled if “in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate,”.
• Registrations are also cancelled when an audit finds irregularities in the finances of an NGO in terms of misutilisation of foreign funds.
• According to FCRA, no order of cancellation of certificate can be made unless the person or NGO concerned has been given a reasonable opportunity of being heard. Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years.
• The ministry also has powers to suspend an NGO’s registration for 180 days pending inquiry, and can freeze its funds.
• All orders of the government can be challenged in the High Court.

-Source: Indian Express, The Hindu