Introduction:

Foreign Contribution Regulation Act (FCRA) is a consolidating act passed by the Government of India in the year 2010. It seeks to regulate the foreign contributions or donations and hospitality (air travel, hotel accommodation etc) to Indian organizations and individuals and to stop such contributions which might damage the national interest.

Since the Act is internal security legislation, despite being a law related to financial legislation, it falls into the purview of Home Ministry and not the Reserve Bank of India (RBI). The Home Ministry has warned NGOs, who have changed their office-bearers and key functionaries without informing the Ministry, with penal action, if they fail to do so within a month.

Body:

Need for FCRA:

• It is an act passed for regulating and prohibiting the acceptance and utilization of foreign contribution or foreign hospitality by companies, associations or individuals for such activities that could prove to be detrimental to the national interest and for matters connected therewith or incidental thereto.
• The act aims at keeping a check on foreigners influencing the Indian electoral politics, journalists, public servants etc. for wrong purposes or activities detrimental to the public interest.
• Those violating the provisions of FCRA can be jailed up to a term of 5 years

Concerns with FCRA:

The Act imposes various conditions on the use of foreign funds and some of them are as follows:

• The Act permits only NGOs having a definite cultural, economic, educational, religious or social programme to accept foreign contribution, that too after such NGOs either obtain a certificate of registration or prior permission under the Act.
• All funds received by a NGO must be used only for the purpose for which they were received.
• Such funds must not be used in speculative activities identified under the Act.
• Except with the prior approval of the Authority, such funds must not be given or transferred to any entity not registered under the Act or having prior approval under the Act.
• Every asset purchased with such fund must be in the name of the NGO and not its office bearers or members.
• In order to be registered under the FCRA, an NGO must be in existence for at least three years and must have undertaken reasonable activity in its field for which the foreign contribution is proposed to be utilised. Further, it must have spent at least INR 1,000,000 over three years preceding the date of its application on its activities.
• The registration certificate is valid for a period of five years and must be thereafter renewed in the prescribed manner.
• NGOs not eligible for registration can seek prior approval from FCRA for receiving foreign funding. This permission is granted only for a specific amount of foreign funding from a specified foreign source for a specific purpose. It remains valid till receipt and full utilisation of such amount.

FRCA and NGO’s:

• NGOs play an important role in the upliftment of the weaker sections of the society and their overall development.
• This is especially true in the case of India, where a vast majority of its population continues to remain under the poverty line and have little or no access to even basic facilities provided by the government.
• Every NGO registered or having prior approval under the Act must file an annual report with the Authority in the prescribed form.
• This report must be accompanied by an income and expenditure statement, receipt and payment account, and balance sheet for the relevant financial year.
• For financial years where no foreign contribution is received, a ‘NIL’ report must be furnished with the Authority.
• In case of non-compliance with provisions of the FCRA, the government can penalize an NGO. For example, if these NGOs don’t file annual returns, the government can issue a show-cause notice and subsequently, suspend or cancel their foreign funding licenses.
• In the last two years, licenses of around 20000 NGOs have been cancelled by the central government after they were found violating various provisions of FCRA act. Hence those NGOs were barred from receiving any foreign funds.

FCRA and spirit of international laws:

• According to the UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association – the FCRA provisions and rules “are not in conformity with international law, principles and standards” because:
• Access to resources, particularly foreign funding, is a part of the right to freedom of association – is a part of Universal Declaration of Human rights (Article 20), meaning a violation of this right constitutes a human rights violation.
• Restrictions in the name of “public interest” and “economic interest” as listed under the FCRA rules fail the test of “legitimate restrictions”. The terms are too vague and give the state excessive discretionary powers to apply the provision in an arbitrary manner

Way forward:

• A National Accreditation Council consisting of academicians, activist, retired bureaucrats should be made to ensure compliance by NGOs.
• There should be better coordination between Ministries of Home Affairs and Finance in terms of monitoring and regulating illicit and unaccounted funds.
• A regulatory mechanism to keep a watch on the financial activities of NGOs and voluntary organizations is the need of the hour.
• Citizens today are keen to play an active role in processes that shape their lives and it is important that their participation in democracy go beyond the ritual of voting and should include promotion of social justice, gender equity, inclusion etc.