Foreign Contribution (Regulation) Act, 2010 – UPSC GS3

Foreign Contribution (Regulation) Act, 2010
It regulates the foreign contribution (money donation) and foreign hospitality (e.g. free airplane tickets and hotel lodging during videsh-yaatra) given to various NGOs, institutes, judges, journalists, public servants etc.
  • Recently the Government has cited FCRA violation to reject several NGO renewal applications.
  • Activists contend that this is being done to silence those who ask inconvenient questions.
  • However, the Government claims that the organizations had violated FCRA norms by engaging in activities detrimental to public interest.
About the FCRA Act
  • The purpose is to check that foreigners are not affecting India’s electoral politics, public servants, judges, journalists, NGOs etc. for wrong purposes.
  • If someone violates the FCRA act, he can be sent to jail for up to 5 years.
  • Organizations working for definite cultural, social, economic, educational or religious programs are eligible for foreign contribution subject to:
    Permission from the Ministry of Home AffairsMaintenance of a separate account book listing the donation received from foreigners and gets it audited by a Chartered Accountant and submits it to Home Ministry every year.
  • The following cannot accept Foreign Contributions:
    Election candidateMPs/MLAsNewspaper-walla: Correspondent, columnist, cartoonist, editor, owner, printer or publishers of a registered Newspaper.Public Servants: Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government.
Evolution of FCRA
  • Originally, the Foreign Contribution (Regulation) Act was enacted in 1976 by the Indira Gandhi-led government during the Emergency.
  • It prohibited electoral candidates, political parties, judges, MPs and even cartoonists from accepting foreign contributions – thus, the intent seems to be the curbing of political dissent
  • Actual reason given was to curb foreign interference in domestic politics in the cold war era where both the Soviets and the Americans meddled in the internal affairs of post-colonial nations to secure their strategic interests.
  • As time passed on, India opened up to foreign funding after LPG reforms of 1991 as it accepted donations from World Bank and IMF – Indian businesses also resorted to Foreign funding as did the political parties
  • A new act called the Foreign Contribution (regulation) Act, 2010 came about to correct shortfalls in the predecessor act of 1976.
Difference between FCRA, 1976 and FCRA, 2010
  • License for 5 years: FCRA registration under the earlier law was permanent, but under the new one, it expired after five years, and had to be renewed afresh. Through this measure state can teach a lesson to any NGO which acts against its interests
  • Directing the usage of administrative expenses: The new law put a restriction (50 per cent) on the proportion of foreign funds that could be used for administrative expenses, thereby allowing the government to control how a civil society organisation (CSO) spends its money
  • Organisations of political nature: While the 1976 law was primarily aimed at political parties, the new law set the stage for shifting the focus to organisations of a political nature. The FCRA, 2011 rules clearly enumerates the organisations of political nature making it easier for successive governments to target inconvenient NGOs. This list contains trade unions, students’ unions, workers’ unions, youth forums, women’s wing of a political party, farmers’ organisations, youth organisations based on caste, community, religion, language etc.
Latest Developments
  • In 2014, the HC directed the ECI to take action against both BJP and Congress for violating the FCRA by accepting contributions from the Indian subsidiaries of the London-based multinational, Vedanta.
  • In 2016, government quietly introduced a clause in the Finance Bill that amended the relevant section of the FCRA, 2010, so that what was hitherto a “foreign company” now became an Indian company.
  • This amendment has also opened the doors for all political parties to accept funding from foreign companies, so long as it is channeled through an Indian subsidiary.
Analysis of FCRA
  • According to the UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association – the FCRA provisions and rules “are not in conformity with international law, principles and standards” because:
    Access to resources, particularly foreign funding, is a part of the right to freedom of association – is a part of Universal Declaration of Human rights (Article 20), meaning a violation of this right constitutes a human rights violation.Restrictions in the name of “public interest” and “economic interest” as listed under the FCRA rules fail the test of “legitimate restrictions”. The terms are too vague and give the state excessive discretionary powers to apply the provision in an arbitrary manner
  • It is ironical that a political class that has no qualms taking money from foreign sources, that amended the FCRA to let itself off the hook for past violations, that opened the doors for all political parties to accept foreign funding, that paved the way for Indian businesses to access foreign capital, is now anxious to prevent CSOs from accessing foreign funds because some of them question its policies in a democratic battle to protect constitutional rights and entitlements.
So, how, then the foreign funding of NGOs should be regulated?
  • Create an autonomous, self-regulatory agency for CSOs – in fact in 2009 it was proposed to create a national-level self-regulatory agency that would monitor and accredit CSOs, along the lines of the Bar Council of India. However, such a proposal did not come to fruition.

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