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DAILY NEWS ANALYSIS

  • 10 May, 2021

  • 5 Min Read

FCRA amendments- Foreign contribution and COVID-19

FCRA amendments- Foreign contribution and COVID-19

Details of the amendments

  • The amendments to the Foreign Contribution Regulation Act (FCRA) enacted last year that among others made it compulsory for NGOs to open a bank account in Delhi and crippled the work of many organisations that are unable to receive foreign funds.
  • Registered NGOs can receive the foreign contributions for five purposes
    • social,
    • educational,
    • religious,
    • economic and
    • cultural.
  • An FCRA registration is mandatory for NGOs to receive foreign funds.
    • There are 22,591 FCRA registered NGOs.

Foreign Contribution (Regulation) Amendment Bill, 2020

  • The Bill amends the Foreign Contribution (Regulation) Act, 2010.

Provisions of the Bill:

  • The Bill bars public servants from receiving foreign contributions. Public servant includes any person who is in service or pay of the government or remunerated by the government for the performance of any public duty.
  • The FCRA 2010 also bars certain persons to accept any foreign contribution. These include election candidates, editors or publishers of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
  • The Bill prohibits the transfer of foreign contributions to any other person.
  • The term ‘person’ under the Bill includes an individual, an association, or a registered company.
  • The FCRA 2010 allows the transfer of foreign contributions to persons registered to accept foreign contributions.
  • The Bill makes Aadhaar number mandatory for all office bearers, directors or key functionaries of a person receiving the foreign contribution, as an identification document.
  • In the case of a foreigner, a copy of the passport or the Overseas Citizen of India card for identification is required.
  • The Bill states that foreign contributions must be received only in an account designated by the bank as an 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.
  • The person may open another FCRA account in any scheduled bank of their choice for keeping or utilising the received contribution.
  • The Bill allows the government to restrict the usage of unutilised foreign contributions. This may be done if, based on an inquiry the government believes that such a person has contravened provisions of the FCRA.
  • The Bill proposes that not more than 20% of the total foreign funds received could be defrayed for administrative expenses. In FCRA 2010 the limit was 50%.
  • The Bill allows the central government to permit a person to surrender their registration certificate.
    • The government may do so if, post an inquiry, it is satisfied that such person has not violated any provisions of the FCRA 2010, and the management of its foreign contribution has been vested in an authority prescribed by the government.

Importance of Amendment:

  • The annual inflow of foreign contributions has almost doubled between the years 2010 and 2019, but many recipients of foreign contributions have not utilised the same for the purpose for which they were registered or granted prior permission under the FCRA 2010.
  • Many persons were not adhering to statutory compliances such as submission of annual returns and maintenance of proper accounts.
  • Such a situation could have adversely affected the internal security of the country.
  • The new Bill aims to enhance transparency and accountability in the receipt and utilisation of foreign contributions and facilitate genuine non-governmental organisations or associations that are working for the welfare of society.

Issues

  • The Bill would impact the livelihoods of workers associated with the small Non-Governmental Organisations (NGOs) and lead to the killing of the entire social sector as caps on administrative expenses would make it impossible for even the bigger NGOs to perform.
  • It will severely impact collaborative research in critical fields in India as organisations receiving foreign funds will no longer be able to transfer them to small NGOs working at the grassroots level.
  • The government aims to control the NGOs which engage in dubious activities. However, failing to recognise the diversity of NGOs, which include world-class organisations that are recognised globally, will crush their competitiveness and creativity.
  • It is also incompatible with international law.
    • The United Nations Human Rights Council resolution on protecting human rights defenders says that no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding.
  • The Bill also fails to comply with India’s international legal obligations and constitutional provisions to respect and protect the rights to freedom of association, expression, and freedom of assembly.
  • The amendments also assume that NGOs that are receiving foreign funds are guilty unless proven otherwise.

Issue during COVID-19

  • An NGO has now moved the Delhi High Court seeking exemption from the Union Home Ministry’s March 31 deadline to open an FCRA account with the SBI branch at Parliament Street here.
  • The petitioner argued that it applied to open the account before the March 31 deadline but the administrative delays on the part of the bank and the Ministry severely restricted its activities including providing COVID-19 relief and paying of urgent salaries of staff and also affected its charitable and educational activities.
  • There is also severe inconvenience involved in submitting copies of all the necessary papers and personal documents, such as Aadhaar card copies and the KYCs of trustees and other members of the NGO.
  • The trustees and members live in different parts of the country, and getting documents together poses immense challenges due to COVID-19 restrictions.
  • The NGOs continue to face problems even as the National Disaster Management Authority (NDMA) on May 6 wrote to all States to involve NGOs, faith-based organisations, and religious and social trusts at the local level to handle the “unprecedented COVID-19 crisis”.

Source: TH


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