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Foreign Contribution (Regulation) Act (FCRA)

Context:

The Central Bureau of Investigation has arrested four current and two former officials of the Foreign Contribution (Regulation) Act (FCRA) division of the Union Home Ministry, along with eight others, for allegedly facilitating illegal clearances to non-governmental organisations (NGOs) under the Act, in lieu of bribes.

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. Foreign Contribution (Regulation) Act, 2010
  2. Foreign Contribution (Regulation) Amendment Act, 2020
  3. Issues Related to FCRA
  4. Non-Governmental Organisations (NGOs) in India
  5. Why have NGOs been controversial recently?
  6. MHA guidelines regarding FCRA and NGOs

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.

Non-Governmental Organisations (NGOs) in India

  • Worldwide, the term ‘NGO’ is used to describe a body that is neither part of a government nor a conventional for-profit business organisation.
  • NGOs are groups of ordinary citizens that are involved in a wide range of activities that may have charitable, social, political, religious or other interests.
  • In India, NGOs can be registered under a plethora of Acts such as the Indian Societies Registration Act, 1860, Religious Endowments Act,1863, Indian Trusts Act, etc.
  • India has possibly the largest number of active NGOs in the world.
  • Ministries such as Health and Family Welfare, Human Resource Department, etc., provide funding to NGOs, but only a handful of NGOs get hefty government funds.
  • NGOs also receive funds from abroad, if they are registered with the Home Ministry under the Foreign Contribution (Regulation) Act (FCRA). There are more than 22,500 FCRA-registered NGOs.
  • Registered NGOs can receive foreign contribution under five purposes — social, educational, religious, economic and cultural.

Why have NGOs been controversial recently?

  • An Intelligence Bureau (IB) report, submitted to the PMO and National Security Adviser in 2019, alleged that several foreign-funded NGOs were stalling India’s economic growth by their obstructionist activism.
  • In 2015, the Home Ministry had cancelled the FCRA licences of 10,000 organisations.
  • The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution are being not utilised the same for the purpose for which they were registered or granted prior permission under amended provisions of the FCRA 2010.

MHA guidelines regarding FCRA and NGOs

  • The Ministry of Home Affairs (MHA) issued new regulating guidelines to banks under Foreign Contribution (Regulation) Act, 2010. It states that the donations received in Indian rupees by non-governmental organisations (NGOs) and associations from any foreign source (even if that source is located in India at the time of such donation) should be treated as foreign contribution.
  • Under the issued regulations, donations given in Indian rupees (INR) by any foreigner/foreign source including foreigners of Indian origin like Overseas Citizen of India (OCI) or Person of India Origin (PIO) cardholders should also be treated as foreign contribution.
  • The guidelines mandate that good practices should be followed by NGOs in accordance with standards of global financial watchdog- Financial Action Task Force (FATF).
  • MHA asked NGOs to inform the Ministry about “suspicious activities” of any donor or recipient and “take due diligence of its employees at the time of recruitment.”

-Source: Indian Express


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