This Article is written by Manasvita Tejsi, a student of Rajiv Gandhi National Law University.
The Foreign Contribution (Regulation) Amendment Bill was introduced in the Lok Sabha on 20th September2020 and was passed on 21st September 2020. The FCRA, Bill faced tough opposition yet it was passed. The Bill seeks to amend The Foreign Contribution (Regulation) Act, 2010. It provides for certain amendments and stricter norms than the previous Act. Many have questioned and criticized the changes provided by the Bill. Foreign Contribution is funds provided to an organization by a foreign company/organization. This has put forward some issues in front of the government relating to the security of the country. The government seeks to solve this issue through an amendment to the aforementioned Act.
BACKGROUND OF FCRA, ACT
India after Independence was in a vulnerable position and the Indira Gandhi government provided the nation with the first and foremost Act for foreign funds/contribution in 1976. The reason given behind this Act was to curb any political or religious activity funded through a foreign organization. The Act in 1976 prohibited judges, MPs, cartoonists, political parties, and electoral candidatesfrom accepting foreign funds to protect the ‘political interests’ of the country. Despite these rules, in 2014, political parties like BhartiyaJanta Party and Congress took foreign funds; the case went to court and the court directed the government as well as the Election Commission-an independent body, to take action. Yet no action was taken. India did take foreign funds from an organization like the World Bank. The aforementioned Act was enacted to mainly stop political parties from taking foreign funds.
The Act was amended in 2010 and there were some sets of amendments and clauses added to the same. The amendment in 2010 provided for changes in the 1976 FCRA:
- The government put a cap of 50% on using the funds that are coming in. Only 50% of the funds can be used for administrative purposes. The government got involved in this clause as it controlled the amount used by these organizations.
- The government also targeted organizations rather than political parties. These organizations were ‘political’ in nature. Those ranged from student organizations to farmer’s organizations.
- According to this amendment, the FCRA license had to be renewed every five years; according to the 1976 Act, the FCRA license did not need any renewal.
In 2015, a clause was added to the FCRA that said that political parties can accept foreign funding through Indian Subsidiaries. This was also made retroactive and hence, the ‘no-action’ against the political parties was justified to the nation through this way. The National Human Rights Commission (NHRC) also pointed out that the renewal of the FCRA license is not legal as it acts as resistance towards human rights even in the case of retrieving foreign funding. In 2016, around 10,000 NGOs lost their FCRA license as the date of renewal passed. This created a hassle for the NGOs which need funding and mostly have a shortage of the same.
THE AMENDMENT OF 2020
The FCRA Bill, 2020 contained amendments created by the government in order to regulate foreign funds. These amendments were:
People who cannot take foreign funds
- The Bill added the word “public servant” in the list along with election candidates, judges, political parties, etc. The Indian Penal Code defines a Public Servant as someone who is a government employee, judges, and officer in the army, navy or the air force, police, officers in court. This primarily means any person in a government office or is being remunerated by the government.
The aadhar card clause
- Aadhar card has been made necessary for renewal or a fresh registration for the FCRA license. The Aadhar clause was not present in the Act before. The person seeking permission must have the Aadhar number of directors and all fundamental people in the office. Without Aadhar documents, there will be no registration or renewal.
Utilization of funds
- A person receiving foreign funds has to be registered under FCRA and they have to utilize the funds given to them for a specific purpose. The funds can only be received and utilized after seeking permission from the government. The government can also control and stop the receiving and utilization of foreign funding, even if the person is registered if the government believes such a person has violated any provisions of the aforementioned act.
Transfer of funds
- Any organization which has registered under FCRA which is receiving foreign funds cannot transfer the funds to any individual or organization that is not registered under FCRA. A ‘person’ is defined in the Foreign Contribution (Regulation) Act, 2010 under Article 2(m), which states:
(i) an individual;
(ii) a Hindu undivided family;
(iii) an association;
(iv) a company registered under Article 25 of the Companies Act, 1956;”
Any of these persons registered under the act can get the fund transferred to them for the work provided.
- According to the Act, the funds received by the person have to be transferred to the bank specified by them; it can be only one bank. But for the utilization of the funds, the person may open accounts in other banks, if necessary. The amendments made to this were that the foreign contribution will only be received in the State Bank of India, New Delhi, as provided by the central government, and the account opened will be named as ‘FCRA account’. No other funds will be transferred in this account and the person can open any other account for utilization of the funds.
Renewal/registration of license
- Any registration renewed has to be done under six months of the expiration date of the license. Moreover, the renewal or registration will not be granted to some people, who are Benami or fictitious, have been found guilty of misappropriating funds or found guilty of inciting communal hate and violence.
- There has been a cut down in the administrative percentage of the fund. The Act provided for 50% of the fund to be used for administrative purposes. The amendment provides for a cut down on the percentage to 20% for administrative uses.
Surrender and suspension
- The government has provided in the amendment that a person may surrender their certificate if they have followed all the provisions of the Act and they have used the funds in the manner prescribed. The government has the power to suspend a person’s registration for only up to 180 days.
THE UPSIDE AND THE DOWNSIDE
The Government of India has tried amending the said Act to suit the security of the nation. Many have questioned the intention and need behind these amendments. The government recently suspended the license of around six NGOs who were using the funds for the conversion of religion. So, for renewal or registration of the license one has to be clear from this specific onus. The main purpose behind the amendment was that over the past years the foreign regulation of funds has been huge but many of these funds are not being used for the purpose that they should have been utilized for. This creates a security issue for India. Many people were not following guidelines to utilize funds or following the strict FCRA bank regulations. This again threatens the security of the nation. The Bill tries to amend the laws in certain ways which would provide stringent regulations and funding to those who are genuinely working for the betterment of society.
The Bill cuts down on the percentage of administrative use from 50% to 20%. This would be effective in bringing down corruption. However, this amendment completely reduced the working of the social sector, rather it completely shut down the social sector. Individuals who are hired for a specific work by an organization cannot be hired and given the said work. This would see a huge downfall in the employment sector. There will be lesser job opportunities for people associated in the social sector. This would also fail to provide funding to the smallest NGOs as they do not have huge chances of directly being a beneficiary to foreign funding. Funding should not be discouraged unless proven there is a misappropriation of funds. The Bill is not compatible if paired with the Constitution of our country; it does nothing to provide for Freedom of Speech and Expression.
All these factors amalgamate and form the amendment of the Foreign Contribution (Regulation) Amendment Bill, 2020. Although this Bill tries to strengthen the security of the country, it fails to look at other aspects like the loss of jobs.
Receiving foreign funding amidst Covid-19 is needed for various activities. It can be used for providing relief to health workers, providing more medical facilities, and other activities. The amendments for the FCRA, Act calls for transparency and holds the NGOs accountable for their actions. There are quite a lot of international funders who are funding organizations in India, which it needs in its current situations. This will become tedious because of all the amendments introduced. Although it may, to some extent, help in resolving internal security issues it will slow down the process of relief providing and overall welfare of society.
- The Foreign Contribution (Regulation) Amendment Bill, 2020- https://www.prsindia.org/sites/default/files/bill_files/FCRA%20Amendment%202020.pdf
- The Foreign Contribution (Regulation) Act, 2010-https://www.prsindia.org/sites/default/files/bill_files/FC-RegulationAct-2010-C.pdf.
- Pranav Srivastava &AashnaKothiyal,Foreign Contribution (Regulation) Amendment Bill, 2020: A Few Hits And Many Misses, MONDAQ, (Sep. 28, 2020) https://www.mondaq.com/india/constitutional-administrative-law/988998/foreign-contribution-regulation-amendment-bill-2020-a-few-hits-and-many-misses.
- Foreign Contribution (Regulation) Amendment Bill, 2020, DRISHTI (Sep. 25, 2020) https://www.drishtiias.com/daily- updates/daily-news-analysis/foreign-contribution-regulation-amendment-bill-2020.
- G. sampath, Time to repeal the FCRA, THE HINDU, (Dec. 26, 2016) https://www.thehindu.com/opinion/lead/Time-to-repeal-the-FCRA/article16946222.ece.