October 21, 2021

Lukmaan IAS

A Blog for IAS Examination

FCRA AMENDMENT

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THE CONTEXT: Foreign Contribution (Regulation) Amendment Bill, 2020 was passed by both the Houses recently which seeks to amend FCRA,2010. It seeks to regulate the acceptance and utilisation of foreign contribution by individuals, associations and companies. In this article, let us try to understand the key amendments and the associated problems regarding it along with possible suggestions.

Amendments under Foreign Contribution (Regulation) Amendment Bill, 2020

 

Acceptance of Foreign Contribution

  • FCRA Act, 2010 prohibits acceptance of foreign contribution by certain persons such as election candidate, editor or publisher of a newspaper, judge, government servant, MPs and MLAs, judges and political parties among others
  •  FCRA (Amendment) Bill 2020 adds public servants ( as defined by IPC) to this list. He is any person who is in service or pay of the government, remunerated by the government for the performance of public duty.

Transfer of foreign contribution

  • A person cannot transfer foreign contribution to any other person unless such persons is also registered to accept under FCRA act 2010
  • FCRA (Amendment) Bill 2020 prohibits to transfer of foreign contribution to any other person I.e. individual, association or registered company

Aadhar for Registration

  • Under FCRA Act, 2010 , a person may accept foreign contribution if they have:
    1. Obtained a certificate of registration from central government or
    2.  Not registered, but obtained prior permission from the government to accept foreign contribution.
  • Under FCRA (Amendment) Bill 2020, now, any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document.  In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.

FCRA Account

  • Presently, a person must accept foreign contribution only in a single branch of a scheduled bank specified by them.  However, they may open more accounts in other banks for utilisation of the contribution.
    1. Foreign contribution can be received only in an account designated by the bank as “FCRA account” in such branch of the State Bank of India, New Delhi, as notified by the central government.
    2. No funds other than the foreign contribution should be received or deposited in this account.  As per FCRA (Amendment) Bill 2020,
    3. The person may open another FCRA account in any scheduled bank of their choice for keeping or utilising the received contribution.

Restriction in utilisation of Foreign Contributions

  • Under FCRA Act, 2010 If a person is found violating any provision of FCRA, the unutilised or unreceived foreign contribution may be utilised or received, only with the prior approval of the central government.
  • Now, as per the current bill, the government can also restrict usage of unutilised foreign contribution for persons who have been granted prior permission to receive such contribution. It can be done, based on a summary inquiry and any other inquiry which makes government believe that such person has contravened the Act.

Renewal of License

  • As per Under FCRA Act, 2010, License needs to be renewed within six months of expiration
  • According to FCRA (Amendment) Bill 2020, Now the government can conduct an inquiry before renewing the certificate to ensure that person applying for it is-
  1. Not fictitious or benami.
  2. Is not prosecuted or convicted for creating communal tensions or indulging in activities aimed at religious conversion
  3. Guilty of diversion or misutilisation of funds.

Restriction in use of foreign contribution for administrative purposes

  • Under FCRA Act, 2010, not more than 50% can be used for administrative expenses but as per the current bill, it reduces it to 20%.

Surrender of Certificate

  • FCRA (Amendment) Bill 2020 adds a provision allowing the Central government to permit a person to surrender their registration certificate based on an inquiry but such provision is not available under FCRA Act, 2010

Suspension of Registration

  • Under FCRA Act, 2010, a registration of a person can be suspended for period not exceeding 180 days.
  • The Bill adds that such suspension may be extended up to an additional 180 days.

Necessity of FCRA

 

  1. International Learning : As per a study by University of Iowa, India has disproportionately high number of foreign funded NGOs. Other outliers were Egypt and Iraq which later suffered from anarchy and upheaval. Thus, to maintain our integrity, it is necessary to regulate these NGOs.
  2. NTU Singapore study : The study showed that foreign interference, foreign influence, soft power and hostile information campaigns are used by NGOs to impact the unity and integrity of nations and highlights the importance of regulating them.
  3. IB Report :An IB report highlighted how FCRA funds were being diverted towards scuttling developmental projects in the power, mining, agricultural and industrial sectors. The modus operandi includes  disguised money flows, staged protests and PR hit jobs against specific projects.
  4. Poverty Porn :Pictures of hungry African children and distraught rural women are used to raise funds, which are then diverted for business-class travel, five-star dinners and jamborees for NGO staff.
  5. High Staff Pay : The donations to organisations like Amnesty International are provided to save democracy and protect human rights. Instead, they are used to pay former executive high severance pay in the
  6. Industry-NGO nexus : Industries are running their own NGOs which are at times used to promote their product in the garb of welfare.

SYNGENTA CASE

 

Switzerland based agrochemical giant Syngenta runs a foundation in India for transforming Indian agriculture. Emamectin Benzoate used to be imported and sold at Rs 10,000 per kg by Syngenta NGO, was later manufactured by domestic companies and sold at Rs 300/kg. Thus, Industry promoted its product through its NGO not for welfare but to increase its own profit.

Problems under FCRA Amendment Bill

 

  1. Legislative Scrutiny :The bill got passed by both the Houses of the Parliament without any real deliberation and thus is seen as a legislative action that intends to silence civil society.
  2. Meaning of Democracy : The bill proposes a flawed understanding of democracy which reduces it to electoral democracy and any other form of democratic action is seen with suspicion and as illegitimate.
  3. Lack of data : The Bill fails to elaborate on the necessity of amendment. It has no data to showcase lack of accountability or regulation of the already heavily regulated NGO sector.
  4. Restriction on distribution of funds :The amendment stops distribution of funds to other bodies including FCRA registered bodies. It fails to understand the structure of NGOs where a big and capable NGO raises funds and then distributes it to small organisation which lack capacity to raise foreign funds on their own.
  5. Restriction of Administrative Expenses to 20% : The expense of any NGO that works on research, advocacy, capacity building, networking, model building for social innovations etc. are mostly administrative expenses. These same NGOs seek accountability from government and thus restriction fo fund use over 20% will throttle civil society.
  6. Bank account to be opened in SBI Delhi Branch : When all the commercial banks are connected through Core Banking solutions, the insistence on a SBI Delhi Branch shows unprecedented centralisation.
  7. Power of Investigation :The enhancement of power of the investigative officers and government officials in the name of inquiry do away with time bound investigations which were in earlier amendment.

WAY FORWARD

 

  1. Institutionalised Transparency and Accountability : NGOs need to be transparent and accountable in their own conduct if they seek to ensure transparency and accountability from the government.
  2. Regulation : NGOs need to be regulated and an Industry led NGO should not be allowed to work in the same or allied sector as that of the parent company. This will stop Industry-NGO nexus and allow real philanthropic bodies to start NGOs.
  3. Macro-management : Government needs to macro-manage the sector and not micro-manage the working of NGOs. Regulation should not lead to silencing the functioning of bodies.
  4. Independent Directors : Similar to Companies, NGOs should also have independent directors which are not motivated by profits and thus provide an independent voice of conscience to the NGOs.
  5. Time-bound Inquiry and permissions : Any inquiry and permissions that have to be provided by the government need to be time bound and all remarks should be noted down in written with attached evidences.


CONCLUSION:

 

NGOs are the third tier of Governance and play an important role in ensuring development of people and the nation. However, it is also true that some of the NGOs have been utilised by people with vested interests against the unity and integrity of nations. Thus, it is pertinent that NGOs should be regulated by the government while at the same time ensuring that their voice is not stifled and their survival is threatened. A proper balance between these two needs to be maintained for ensuring growth of nation and development of citizens.

Questions to Ponder

 

  1. “NGOs are dangerous. They do what the missionaries used to do in Colonial times. They are trojan horses. The worse the situations, the more the NGOs” ‐ Arundhati Roy. Comment.
  1. Critically analyse the FCRA Amendment Bill, 2020 while enumerating its salient features.
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