Foreign Contribution Regulation Act (FCRA) - UPSC Economics Notes (GS-III)

Foreign Contribution Regulation Act (FCRA) came into the news when the Central Bureau of Investigation (CBI) raided offices of Amnesty International (NGO) for its alleged irregularities in foreign funding, in violation of the provisions of FCRA 2010. The act is important for Mains GS-III of the IAS Exam and this article will provide you with relevant facts about FCRA 1976, FCRA 2010.

In 2020, the FCRA Amendment Bill was passed by the Indian Parliament.

Latest Context:

• A U.S. based organisation, Global Peace Initiative, made a plea in the Supreme Court which challenged the expiry of the FCRA licences of nearly 6,000 NGOs.
• The organisation requested the court to let these NGOs continue with their licences until further orders.
• Meanwhile, the Supreme Court declined to pass an interim order directing the government to extend the validity of licences of NGOs under the Foreign Contribution Regulation Act (FCRA) which expired on September 30 last year.
• Also, the apex court pronounced that first it could take up the pending Noel Harper versus Union of India case on the validity of the amendments made to the FCRA in 2020 before making a conclusion regarding this petition.

Introduction to FCRA 1976, FCRA 2010

FCRA 1976

On 31st March 1976, FCRA was enacted with an aim to regulate the utilization of foreign contributions/hospitality by individuals, associations to keep it consistent with the values of a sovereign, democratic republic. The FCRA was enacted in 1976 in order to maintain strict control over voluntary organisations and political associations that received foreign fundings. In 1984, an amendment was made to the act requiring all the Non Governmental Organisations to register themselves with the Home Ministry. In 2010, the act was repealed and a new act with strict provisions was enacted.

FCRA 1976 Document:-Download PDF Here

FCRA 2010

FCRA 2010 is a consolidating act passed by the Government of India in the year 2010. It seeks to regulate foreign contributions or donations and hospitality (air travel, hotel accommodation etc) to Indian organizations and individuals and to stop such contributions which might damage the national interest. It is an act passed for regulating and prohibiting the acceptance and utilization of foreign contribution or foreign hospitality by companies, associations or individuals for such activities that could prove to be detrimental to the national interest and for matters connected therewith or incidental thereto.

Since the Act is internal security legislation, despite being a law related to financial legislation, it falls into the purview of the Home Ministry and not the Reserve Bank of India (RBI).

FCRA 2010 Document:-Download PDF Here

Need for FCRA

The act aims at keeping a check on foreigners influencing the Indian electoral politics, journalists, public servants etc. for wrong purposes or activities detrimental to the public interest. Those violating the provisions of FCRA can be jailed up to a term of 5 years.

Salient features of FCRA 2010

Here is a brief introduction to the provisions of the FCRA 2010:

• A provision was made for the cancellation of registrations of NGOs if the Home Ministry believes that the organisation is political and not neutral.
• The registration certificate granted to the NGOs under the 2010 act came with five-year validity.
• A provision was inserted stating that the assets of the person who has become defunct needs to be disposed of in a manner stated by the government.
• A separate account needs to be maintained by the organisations to deposit the Foreign Contributions received and no other funds except for Foreign Contributions shall be deposited in that account.
• Every bank would be obligated to report to the prescribed authority, the amount of foreign remittances received and other related details such as the source, manner of receipt etc.

Who can accept Foreign Contribution?

Organizations working for definite cultural, social, economic, educational or religious programs, if and only if they are

1. Registered with the Home Ministry
2. 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 are 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

It is a relevant topic for the Civil Services Exam and falls under the topic “Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment” in General Studies Paper 3. It is important to keep reading newspaper articles and editorials on this subject as it can be asked directly or indirectly in the IAS exam. Since there is a plethora of information on this subject, candidates should keep a note of all the points and material they have on this subject, neatly classified.

Foreign Contribution (Regulation) Amendment Bill 2020

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. In FCRA 2020, only 20% of the foreign funds can be used for administrative purposes, while the limit was 50% in FCRA 2010. 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).

Aspirants can read similar topics linked in the table below:

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