SC Upheld FCRA Amendments | 09 Apr 2022

Why in News?

Recently, 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.
• In 2020, the Indian government had proposed amendments to the FCRA, which imposed new restrictions on how Non-Governmental Organisations (NGOs), individuals, and other organisations could receive or use funds contributed from abroad.

What are the Highlights of the Judgements?

• Medicine vs Intoxicant Metaphor: Foreign Contributions serves as a medicine so long as it is consumed (utilised) moderately and discreetly.
  • However, free and uncontrolled flow of foreign contribution can act as an intoxicant that has the potential of impacting the sovereignty and integrity of the nation.
• Imposing Political Ideology: The SC underlined that foreign contributions may tend to influence or impose political ideology.
  • Thus, FCRA amendments are essentially conceived in the interest of public order as the intent is to prevent misuse of donations coming from foreign sources.
• Global Precedents: Receiving foreign donations cannot be an absolute or even a vested right.
  • This is because the theory of possibility of national polity being influenced by foreign contribution is globally recognised.
• Upholding Legislation: In this scenario, it had become necessary for Parliament to step in and provide a stringent regime for effectively regulating the inflow and utilisation of foreign contribution.

What is Foreign Contribution (Regulation) Act (FCRA), 2010?

• Foreign funding of persons in India is regulated under FCRA act and is implemented by the Ministry of Home Affairs.
  • 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.
• The Act ensures that the recipients of foreign contributions adhere to the stated purpose for which such contribution has been obtained.
• Under the Act, organisations are required to register themselves every five years.

What were the Amendments done in the Act?

• Prohibition to accept foreign contribution: It bars public servants from receiving foreign contributions.
• Transfer of foreign contribution: It prohibits the transfer of foreign contribution to any other person.
• Aadhaar for registration: Aadhaar number is mandatory for all office bearers, directors or key functionaries of a person receiving foreign contribution, as an identification document.
• FCRA account: 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.
• Restriction in utilisation of foreign contribution: It allowed the government to restrict usage of unutilised foreign contribution.
  • This may be done if, based on an inquiry the government believes that such person has contravened provisions of the FCRA.
• Administrative Capping: While NGOs earlier could use up to 50% funds for administrative use, the new amendment restricted this use to 20%.

What are the Objectives and Issues Related to the Amendments?

• Objectives: 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.
  • Recently, the Union Home Ministry has suspended licences of the six (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.
  • It also aims to enhance transparency and accountability in the receipt and utilisation of foreign contributions and facilitate the genuine NGOs who are working for the welfare of society.
• Issues: The Amendments led to criticism from some quarters that it could have a deleterious effect on civil society organisations.
  • The government aims to control the NGOs which engage in dubious activities.
  • However, by failing to recognise the diversity of NGOs, which include world-class organisations that are recognised globally, will crush their competitiveness and creativity.

Way Forward

• NGOs are helpful in implementing government schemes at the grassroots. They fill the gaps, where the government fails to do their jobs.
• The government must stick to the ancient Indian ethos of Vasudhaiva Kutumbakam as the framework for its global engagement and should not act with vendetta against the NGOs who criticise its working.

Source: IE