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What is Foreign Contribution (Regulation) Act, and how does it control donations with respect to the difference in regulations for various political and non-political associations in the country.?

The  Foreign Contribution (Regulation) Act, 2010 regulates the foreign donations for all types of associations in India. First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations. Features of FCRA Act
  • Applicability: It applies to NGOs as well as Members of legislature, political parties, government officials, judges, media persons.
  • Mandatory registration: It is mandatory for all such groups and NGOs which intend to receive foreign donations. This is initially valid for five years that can be renewed subsequently if it complies with all norms.
  • Filing of annual returns, on the lines of Income Tax, is compulsory.
  • Transfer of foreign contribution not allowed.
Difference in regulations for political and non-political associations
Non-Political Associations Political Associations
Can't receive foreign funds without registration: FCRA registration would expire after 5 years & had to be renewed afresh. Earlier it was permanent. The Renewal of license within 6 months of expiration. Further, MHA can suspend registration upon receiving adverse inputs. Can's receive foreign funds at all:  Members of legislature, political parties, government officials, judges, media persons are prohibited from receiving any foreign contribution
NGOs Can receive donations for 5 purposes only: Registered associations can receive foreign contribution for social, educational, religious, economic and cultural purposes. Exception For political parties: In 2017, the MHA through the Finance Bill route amended the 1976 repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company where an Indian holds 50% or more shares.
Regulation of spending: Reduction in use of foreign contribution for administrative purposes from 50% to 20%, thereby controlling how a civil society spends its money. No regulation for political parties: Once fund is received, they can use in any way possible. However,  Members of legislature, government officials, judges and media persons cannot receive any amount in individual capacity.
Single Aadhar linked SBI account to receive funds: the NGOs registered under the Act were asked to open a designated bank account at the SBI, Delhi and compulsorily register the Aadhaar details of the chief functionaries, trustees and office-bearers. The same regulation applies.                               Further, under the Representation of People's act(RPA), only Single account is possible to receive money electoral bonds. No other regulation is there in favour of political parties.
Undertaking to be submitted: regarding - National Security: that foreign funds are not likely to prejudicially affect the sovereignty & integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony. No such regulation for Political parties. However, for Political interest groups, all regulation that are applicable for the NGO applies.
Impact on the functioning of the organizations:
    • Disparity when compared to Political parties: given the relative ease with which political parties are able to access foreign funds for their campaigns through electoral bonds, under the same FCRA that seeks to restrict funds to NGOs.
    • Mass Rejections of applications: As many as 2,000 NGOs under scrutiny may be denied a renewal of their FCRA licence. Ex - Mother Teresa's Missionaries of Charity and its roughly 200 homes around the country have been denied foreign funding.
    • Government control: Prominent names among nearly 20,000 NGOs to have lost their foreign-funding licences since 2014 include Amnesty International, Greenpeace India, People’s Watch, European Climate Foundation, Compassion International and the Gates Foundation-backed Public Health Foundation of India.
    • Many NGOs are engaged in welfare: At a time when India is facing the crippling effects of the COVID-19 pandemic and a long-term economic crisis, the Government’s moves that have resulted in an estimated 30% drop in international non-profit contributions, only hurt the poorest and most vulnerable recipients of philanthropic efforts, particularly those by NGOs working in areas where government aid fails to reach.
The regulation by the government ministry does impact the functioning of the government.  However, it is a necessary regulation given the impact that these association can make in “sensitive areas”. Nevertheless, the government needs to bring in more transparency in the procedures adopted in banning the organizations.






POSTED ON 03-01-2022 BY ADMIN
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