The Indian Supreme Court (SC) recently affirmed the constitutional validity of the Foreign Contribution (Regulation) Amendment Act (FCRA), 2020. This legislation dictates that receiving foreign donations is not an absolute right but can be regulated by Parliament. The 2020 amendments to the FCRA laid down additional restrictions on how Non-Governmental Organisations (NGOs), individuals, and other organisations could receive or use funds contributed from abroad.
Key Takeaways from the Judgement
The SC offered a metaphor likening foreign contributions to a medicine. While useful when used appropriately and in moderation, unrestricted flows of foreign funding can disrupt the nation’s sovereignty and integrity. The court also emphasised that foreign contributions might impose or influence political ideologies. Therefore, the FCRA amendments are fundamentally designed to safeguard public order by preventing the misuse of overseas donations.
Distinctions were also drawn with global precedents. Receipt of foreign donations cannot be considered an absolute or vested right as the potential influence of foreign contributions on national policies is internationally recognised. Given this context, the Indian Parliament found it necessary to enforce a stringent framework to effectively oversee the inflow and application of foreign contributions.
The Foreign Contribution (Regulation) Act (FCRA), 2010
Administered by the Ministry of Home Affairs, the Act oversees foreign funding for individuals in India. Personal acceptance of foreign contributions is permitted, without requiring the Ministry’s permission, as long as the monetary limit for such acceptance remains below Rs. 25,000. Moreover, the Act mandates that recipients comply with the purpose for which the contribution was received. Organisations need to register themselves every five years under this Act.
Notable Amendments to the Act
Public servants can no longer receive foreign contributions, and the transfer of such contributions to other individuals is prohibited. Aadhaar identification is now mandatory for all office bearers, directors, or key functionaries of an organisation receiving foreign funding. Foreign contributions should only be received in an FCRA-designated account with specified branches of the State Bank of India in New Delhi. Moreover, no funds other than the foreign contribution should be deposited in this account.
The amendments also empower the government to restrict the usage of unutilised foreign policies if they contravene FCRA provisions. Furthermore, while NGOs could previously use up to 50% of the funds for administrative use, the new amendment has limited this to 20%.
Objectives and Issues Surrounding the Amendments
The amendments were initiated due to non-compliance by some recipients regarding the appropriate utilisation of foreign contributions, impacting national security. At the same time, the legislation aims to enhance transparency and accountability concerning the receipt and use of foreign contributions, whilst supporting bona fide NGOs benefitting society.
Nevertheless, the amendments have attracted criticism for potentially having a harmful effect on civil society organisations. It became evident that while the government is intent on regulating NGOs involved in dubious activities, the heterogeneity of such organisations, including globally recognised ones, was not acknowledged, potentially stifling their creativity and competitiveness.
Way Forward
Given that NGOs play a crucial role in implementing government schemes at the grassroots level, it is essential to manage them effectively without thwarting their growth and innovation. The government should continue to embrace the ancient Indian ethos of Vasudhaiva Kutumbakam in its global engagement strategy and resist taking actions against NGOs that criticise its functioning.