Context
SC upholds constitutional validity of Foreign Contribution (Regulation) Amendment Act, 2020, says it serves to safeguard India’s ‘sovereignty and integrity’.
About Foreign Contribution (Regulation) Amendment Bill 2020
- In FCRA 2020, only 20% of the foreign funds can be used for administrative purposes, while the limit was 50% in FCRA 2010.
- The foreign inflow has almost doubled in the last decade, however, as per the government, the entities receiving the funds aren’t using it for the declared purpose.
- This might hamper the workings of several small NGOs that depend on such funds.
- The new provisions aim to enhance transparency and accountability in the matter of foreign funds inflow and utilisation.
- The bill also makes the Aadhaar number mandatory for recipients (passport or OCI card will be used as the identification document in case of foreigners).
What is the FCRA?
- Objective: First enacted in 1976 FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
- Applicability: The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA.
- Accountability: Registered associations can receive foreign contributions for social, educational, religious, economic and cultural purposes. Filing of annual returns, on the lines of Income Tax, is compulsory.
- Modified rules in 2015: New rules by Ministry of Home Affairs said all such NGOs would have to operate accounts in either nationalised or private banks which have core banking facilities to allow security agencies access on a real time basis.
Significance of the amendment
- Prevent misuse:
- The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the FCRA 2010.
- Recently, the Union Home Ministry has suspended licenses of the six (NGOs) who were alleged to have used foreign contributions for religious conversion.
- Strengthen National security:
- 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.
- Transparency and accountability:
- The new Bill aims to enhance transparency and accountability in the receipt and utilisation of foreign contributions and facilitate the genuine non-governmental organisations or associations who are working for the welfare of society.
Who can accept Foreign Contribution?
Organizations working for definite cultural, social, economic, educational or religious programs, if and only if they are-
- Registered with the Home Ministry.
- Maintaining a separate account listing the donations received from foreigners, getting it audited by a Chartered Accountant and submitting it to the Home Ministry, every year.
Who is debarred from receiving Foreign Contribution?
- A candidate contesting an election
- Cartoonist, editor, publishers of a registered newspaper
- Judge
- Government servants or employee of any corporation
- Member of any legislature
- Political parties
