Foreign Contribution Regulation Act (FCRA)

Context:

The Supreme Court upheld amendments introducing restrictions in the Foreign Contribution (Regulation) Act (FCRA) while holding that no one has a fundamental or absolute right to receive foreign contributions.

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

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.

Supreme Court’s stand

• In a judgment that may hit non-governmental organisations (NGOs) working at the grass-root level with no direct link to foreign donors, the court reasoned that unbridled inflow of foreign funds may destabilise the sovereignty of the nation.
• The restrictions involve a bar on using operational FCRA accounts to get foreign contributions and mandatory production of the Aadhaar card for registration under the FCRA.
• They require NGOs and recipients to open a new FCRA account at a specified branch of the State Bank of India in New Delhi as a “one-point entry” for foreign donations.
• The petitioners, including individuals and NGOs engaged in cultural, educational, religious activities, argued that the amendments suffered from the “vice of ambiguity, over-breadth or over-governance” and violated their fundamental rights.
• But the court countered that the amendments only provide a strict regulatory framework to moderate the inflow of foreign funds.

-Source: The Hindu