The FCRA registration of 1,811 NGOs were cancelled by the government between 2019 and 2021 for alleged violation of law.
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". It is an act of Parliament enacted in 1976 with an objective to regulate foreign donations and to ensure that such contributions do not adversely affect internal security. It is applicable to all associations, groups, and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA. The registration is initially valid for five years which can be renewed subsequently if they comply with all norms. Registered NGOs can receive foreign contributions for five purposes — social, educational, religious, economic, and cultural. It is implemented by the Ministry of Home Affairs.
About Foreign Contribution Regulation (Amendment), Act 2020: (i) It bars public servants from receiving foreign contributions. (ii) It prohibits the transfer of foreign contributions to any other person. (iii) Aadhaar number is mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document. (iv) No funds other than the foreign contribution should be received or deposited in this account. (v) It allowed the government to restrict usage of unutilized foreign contributions. This may be done if, based on an inquiry the government believes that such person has contravened provisions of the FCRA. (vi) The foreign contribution must be received only in an account designated by the bank as an FCRA account in such branches of the State Bank of India, New Delhi.
Recent Issues Related to FCRA: (i) Home Ministry suspended licenses of some NGOs who were alleged to have used foreign contributions for religious conversion. Such a situation could have adversely affected the internal security of the country. (ii) Several international and well-known NGOs such as Compassion International, Greenpeace India, Sabrang Trust, Lawyers’ Collective, Amnesty International, and Ford Foundation have come under the government’s scanner for alleged violations of FCRA. (iv) The PM CARES Fund received an exemption from all provisions of the Foreign Contribution (Regulation) Act.
Judicial View of the Amendment: The Supreme Court (SC) upheld the constitutional validity of the Foreign Contribution (Regulation) Amendment Act (FCRA), 2020. It held that receiving foreign donations cannot be an absolute right and can be regulated by the Parliament.
Challenges Associated with the Recent Amendment: (i) Over-regulation of NGOs: New regulations put excessive conditions on civil society organizations that have partnerships with foreign entities. Further, the restriction of sub-grant impacted many niche organizations working in very remote areas. (ii) Against Constitutional Rights: According to the International Commission of Jurists, the new law is incompatible with international obligations and India’s own constitutional provisions on rights. (iii) Discourage Social Work: Thousands of NGOs serve extremely disadvantaged sections. Presumption of guilt against all of them and excessive control, restricts their scope of voluntary actions. (iv) Incompatible with international laws: The United Nations Human Rights Council resolution on protecting human rights defenders says that no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding. (v) Additional cost of compliance: Every FCRA-registered NGO will have to open an FCRA-marked bank account with a designated branch of the State Bank of India in New Delhi. Around 93% of FCRA NGOs are registered outside Delhi, and they now have to open a bank account in the capital.
NGOs should maintain a high degree of transparency in their work and also in their financial statements. NGOs need to keep their income and expenditure open to public scrutiny. Also, the government must realize that NGOs are a medium to contribute to development efforts of India and seamless sharing of ideas and resources across national boundaries is essential to their functioning, and it should not be discouraged unless there is reason to believe the funds are being used to aid illegal activities.