UPSC Essentials: One word a day – FCRA

Subject: Economy and Governance

(Relevance: For both prelims and mains. Amendments in this act make it a good prelims fodder. Effect on NGOs, SC’s recent ruling on the validity of amendments etc. makes it a valid question for GS II and III. Point to ponder and MCQ below must be attempted.)

Why in news?

—The Ministry of Home Affairs (MHA) has removed some crucial data from the Foreign Contribution (Regulation) Act (FCRA) website.

—The information removed includes the annual returns of NGOs and a list of NGOs whose licences have been cancelled.

What is FCRA- Foreign Contribution (Regulation) Act?

—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 funding in India is regulated under FCRA act. Individuals are permitted to accept foreign contributions without permission of MHA.

—However, the monetary limit for acceptance of such foreign contributions shall be less than Rs. 25,000.

—It is implemented by the Ministry of Home Affairs.

—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.

What have been the major amendments to the FCRA?

—An amended FCRA was enacted under the UPA government in 2010 to “consolidate the law” on utilisation of foreign funds, and “to prohibit” their use for “any activities detrimental to national interest”.

—The law was amended again by the current government in 2020, giving the government tighter control and scrutiny over the receipt and utilisation of foreign funds by NGOs. It should ne noted that many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the FCRA 2010.

What are some key highlights of 2020 amendment ?

—It bars public servants from receiving foreign contributions.

—It prohibits the transfer of foreign contributions to any other person.

—Aadhaar number is mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.

—The 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.

—No funds other than the foreign contribution should be received or deposited in this account.

—It allowed the government to restrict usage of unutilized foreign contribution. This may be done if, based on an inquiry the government believes that such person has contravened provisions of the FCRA.

— While NGOs earlier could use up to 50 percent funds for administrative use, the new amendment restricted this use to 20 percent .

What are the requirements?

FCRA requires every person or NGO seeking to receive foreign donations to be

(i) registered under the Act

(ii) to open a bank account for the receipt of the foreign funds in State Bank of India, Delhi,

(iii) to utilise those funds only for the purpose for which they have been received and as stipulated in the Act.

(iv) they are also required to file annual returns, and they must not transfer the funds to another NGO.

What does the Act prohibit?

The Act prohibits the receipt of foreign funds by

(i) candidates for elections.

(ii) journalists or newspaper and media broadcast companies.

(iii) judges and government servants, members of legislature and political parties or their office-bearers, and organisations of a political nature.

What are the new changes and new rules?

—In the first week of July this year, the MHA effected changes to FCRA rules through two gazette notifications and increased the number of compoundable offences under the Act from 7 to 12.

—The other key changes were exemption from intimation to the government for contributions less than Rs 10 lakh – the earlier limit was Rs 1 lakh — received from relatives abroad, and increase in time limit for intimation of opening of bank accounts.

—Under the new rules, political parties, legislature members, election candidates, judges, government servants, journalists and media houses among others – all barred from receiving foreign contribution – will no longer be prosecuted if they receive foreign contribution from relatives abroad and fail to intimate the government within 90 days.

—However, the recipient will be required to pay 5% of the foreign contribution received.

How is FCRA registration granted?

—NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation.

—FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.

—Following the application by the NGO, the MHA makes inquiries through the Intelligence Bureau into the antecedents of the applicant, and accordingly processes the application.

—Under the FCRA, the applicant should not be fictitious or benami; and should not have been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another.

—The applicant should also not have been prosecuted for or convicted of creating communal tension or disharmony; should not have been found guilty of diversion or misutilisation of funds; and should not be engaged or likely to be engaged in the propagation of sedition.

—The MHA is required to approve or reject the application within 90 days. In case of failure to process the application in the given time, the MHA is expected to inform the NGO of the reasons for the same.

—Once granted, FCRA registration is valid for five years. NGOs are expected to apply for renewal within six months of the date of expiry of registration.

—In case of failure to apply for renewal, the registration is deemed to have expired, and the NGO is no longer entitled to receive foreign funds or utilise its existing funds without permission from the ministry.

What have been the recent issues related to FCRA?

—Union 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.

—The FCRA registration of close to 5,900 NGOs, including Oxfam India Trust and Indian Medical Association, lapsed on December 31 last year.

—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.

—Until 2011, there were more than 40,000 NGOs registered under FCRA in India. That number now stands at 16,000.

—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.

—The PM CARES Fund received an exemption from all provisions of the Foreign Contribution (Regulation) Act.

Point to ponder: Foreign Contributions serve as medicine only till the time it is consumed moderately and discreetly. Do you agree?

(source: fcraonline.nic.in)

MCQ:

Consider the following statements and select the incorrect option.

a) FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.

b) Once granted, FCRA registration is valid for five years.

c) Interest earned from foreign contribution (FC) is not considered a foreign contribution.

d) Donations given by Non-Resident Indians (NRIs) cannot be treated as ‘foreign contribution’.

Answer for the previous MCQ –

UPSC Essentials: One word a day – ICSE- (d)