Sansad TV: An Insight- Foreign Contribution (Regulation) Amendment Act, 2020 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

The Act regulates the acceptance and use of foreign donations by individuals, associations, and companies. It states that receiving foreign contributions is not an absolute right and can be controlled by the Parliament. The Amended Act prohibits public servants from receiving foreign contributions. All organizations intending to receive foreign donations must register under the FCRA. Foreign contribution refers to the donation or transfer of currency, securities, or articles from a foreign source, exceeding a specified value.

• Prohibition on accepting foreign contribution: According to the Act, certain individuals are prohibited from accepting any foreign contribution. These include election candidates, newspaper editors or publishers, judges, government servants, members of legislative bodies, and political parties, among others. The Bill adds public servants (as defined under the Indian Penal Code) to this list. Public servants include individuals in government service or remunerated by the government for performing public duties.
• Transfer of foreign contribution: The Act states that foreign contributions cannot be transferred to another person unless that person is also registered to accept foreign contributions (or has obtained prior permission under the Act). The Bill amends this to prohibit the transfer of foreign contributions to any other person. The term 'person' in the Act includes individuals, associations, or registered companies.
• Aadhaar for registration: The Act allows a person to accept foreign contributions if they have obtained a certificate of registration from the central government or prior permission to accept foreign contributions. Anyone seeking registration, renewal of registration, or prior permission must apply to the central government as prescribed. The Bill adds that those seeking prior permission, registration, or renewal of registration must provide the Aadhaar number of all office bearers, directors, or key functionaries for identification. Foreigners must provide a copy of their passport or Overseas Citizen of India card for identification.
• FCRA account: Under the Act, a registered person must accept foreign contributions only in a designated branch of a scheduled bank. However, they may open additional accounts in other banks for utilizing the contributions. The Bill amends this to specify that foreign contributions must be received only in an account designated as the "FCRA account" at a branch of the State Bank of India in New Delhi, as notified by the central government. No funds other than foreign contributions should be received or deposited in this account. The person may open another FCRA account in any scheduled bank of their choice for keeping or utilizing the received contributions.
• Restrictions on utilization of foreign contribution: According to the Act, if a person accepting foreign contributions violates any provisions of the Act or the Foreign Contribution (Regulation) Act, 1976, the unutilized or unreceived foreign contributions may be utilized or received only with prior approval from the central government. The Bill adds that the government may also restrict the use of unutilized foreign contributions for persons granted prior permission to receive such contributions. This can be done if, based on a summary inquiry and pending further inquiry, the government believes that such persons have contravened the provisions of the Act.
• Renewal of license: Under the Act, every person with a registration certificate must renew it within six months of expiration. The Bill allows the government to conduct an inquiry before renewing the certificate to ensure that the applicant: (i) is not fictitious or benami, (ii) has not been prosecuted or convicted for creating communal tension or engaging in activities aimed at religious conversion, and (iii) has not been found guilty of diverting or misutilizing funds, among other conditions.
• Reduction in use of foreign contribution for administrative purposes: The Act states that a person receiving foreign contributions must use them only for the intended purpose and not allocate more than 50% for administrative expenses. The Bill reduces this limit to 20%.
• Surrender of certificate: The Bill allows the central government to permit a person to surrender their registration certificate if, after an inquiry, it is satisfied that the person has not contravened any provisions of the Act and the management of their foreign contributions (and related assets) has been entrusted to an authorized authority prescribed by the government.
• Suspension of registration: Under the Act, the government may suspend a person's registration for a period not exceeding 180 days. The Bill adds that this suspension may be extended for an additional 180 days.

Reasons for the amendments

• It is important to hold NGOs accountable and responsible for their actions.
• Ensuring proper use of funds is crucial.
• The primary objective is to regulate the acceptance and use of foreign contributions or hospitality by specified individuals and prohibit the acceptance and use of such contributions or hospitality for activities harmful to national interest.
• The Act aims to prevent the use of foreign contributions or hospitality for activities detrimental to national interest.
• The need to strengthen the Act arises from several organizations misusing or misappropriating funds, leading to the cancellation of 20,664 registrations by the government in recent years.
• The annual inflow of foreign contributions has almost doubled between 2010 and 2019, but many recipients have not utilized the funds for their intended purpose as registered or granted prior permission under the Act.
• Criminal investigations had to be initiated against numerous non-governmental organizations involved in outright misappropriation or misuse of foreign contributions.

Criticism

• The Bill will increase government power and restrict the work of foreign-funded civil society in India.
• It can be used to target individuals who criticize the government.
• It will make it more difficult for civil society organizations to conduct their business.
• To allow the central government to conduct a summary inquiry and direct bodies with FCRA approval not to utilize the unutilized foreign contributions or receive the remaining portion.
• To limit the use of foreign funds for administrative purposes, which would affect research and advocacy organizations that rely on the funding for their administrative costs.

Conclusion

NGOs play a crucial role in uplifting the underprivileged sections of society and contributing to their overall development. This is especially significant in India, where a large portion of the population still lives below the poverty line and lacks access to basic government-provided facilities. Having a regulatory mechanism to monitor the financial activities of NGOs and voluntary organizations is necessary. Citizens today aspire to actively participate in shaping their lives and it is important that their engagement in democracy goes beyond mere voting, encompassing the promotion of social justice, gender equity, inclusion, and more.