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FCRA and Recent Amendments



Context


To keep a tight check on the incoming foreign funds towards non-government organizations/groups and for better regulation of the foreign funding regime, the Ministry of Home Affairs (MHA) notified new rules under the Foreign Contribution (Regulation) Act, 2010 rules in the year 2020.

 

NGOs and their Significance


  • Non-Governmental Organisations Popularly known as NGOs, these are not-for-profit organizations that operate independently mostly through donations to serve a particular social purpose or give support to a social or political cause.

  • The Numbers India is one of the most populous countries in the world with about a 1.3 Billion population. Out of these 1.3 billion, according to Asian Development Bank, more than 22% of people live below the poverty line and many more live under similar circumstances. NGOs are a ray of light for these people.

  • Role of NGOs In India, NGOs play a major role in uplifting the economically weaker section through numerous activities like donations, awareness, Sanitation drives, education campaigns, etc. thereby ensuring their all-round development.

  • Malpractices Although NGOs were created for the development of people, several cases emerged where they were being used as a channel for money laundering. Therefore, a law called FCRA was passed to scrutinize them.

 

Process for Registration of NGOs in India


Every NGO has to register itself with the Ministry of Home Affairs, Government of India and it is mandatory for them, every year, to submit

  1. An annual report with all the activities performed under the NGO

  2. An Income-Expenditure Statement for that financial year.

  3. A Receipt and Payment Account for that financial year.

  4. Balance Sheet for that financial year.

  5. In case of no foreign funding, a NIL report must be furnished.

In case of non-compliance with FCRA rules, the NGO can be banned or penalized according to the veracity of the violation.

 

Foreign Contribution (Regulation) Act, 2010


  • The Foreign Contribution (Regulation) Act was originally enacted by the Indian Government on March 31st, 1976.

  • Aim: The law was enacted with an aim to maintain scrutiny over the voluntary organizations and political organizations that received foreign donations. This law focused on regulating the utilization of funding from foreign channels to keep them in line with the basic structure of the Indian Constitution.

  • Although the law deals with economic activities, it is kept under the ambit of the Home Ministry as it influences the National Security.

  • As per the FCRA, members of legislatures, political parties, government officials, judges, and media persons are prohibited from receiving any foreign contribution.

  • FCRA is applicable to all associations, groups, and non-governmental organizations (NGOs) who intend to receive foreign donations.

 

Past Amendments in FCRA


  • In 1984, the Government realized that there must be a record of registered NGOs in India so that shady business could be monitored well. As a result, this law was amended and it was made mandatory for all the NGOs to get themselves registered with the Home Ministry of the Government of India.

  • In 2010, the whole FCRA was repealed for being too lenient and a whole new revamped and stricter law was passed with the same name.

  • Under the new additions to the legislation, one was that the Home Ministry now had the power to cancel the registration of an NGO if it thinks that the Organisation is not neutral.

  • The NGOs were also mandated to open an exclusive bank account to review foreign Contributions. According to the law, the organization could only receive the contributions in that particular account and nowhere else.

  • Banks were also obligated to details of foreign remittances and other details of the source to the concerned authorities.

  • The NGOs must have the permission of the Government before they start receiving foreign funding.

  • The Government can refuse to give permission for securing foreign payments if it thinks that the donations to NGOs can adversely affect the public interest or the economy of India.

 

Amendments in the year 2020


Relaxation for non-political Groups & Individuals

The norms for farmers, students, religious or other groups who aren’t directly associated to any political party to receive foreign funds have been relaxed. The norms for other groups not involved in active politics are also relaxed in new rules.


Registration Process now more stringent

  • Any organization that wants to receive foreign funding and get registered under FCRA Rules must be existent for three years and should have spent a minimum of 15 Lakhs during three financial years towards fulfilling its objectives for the betterment of society.

  • However, Central Government has been conferred with the power to waive off these conditions in exceptional cases or in cases where the person is controlled by the Central/State Government.

  • Also, heads of NGOs seeking registration under FCRA rules will now have to submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it was given.


Change in definition of ‘Political Groups’

  • Earlier, the Clause V of the Foreign Contribution (Regulation) Act defined a political group as organizations of farmers, workers, students, youths based on caste, community, religion, language, or otherwise, which is not directly aligned to any political party, but whose objectives as stated in the memorandum of association, or activities gathered through other material evidence, including steps towards advancement of political interests of such groups.

  • Also, Clause VI qualified a group as political if the organization by whatever name habitually engages itself in or employs common methods of political action like rasta roko, jail bharo, pinjra tod, bandh or hartal in support of public causes.

  • In the latest Amendment, a new clause has been added which implies that groups mentioned in Clause V and Clause VI will only be considered as political groups by the Central Government if they participate in ‘Active Politics or Party Politics’.