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Home / India News / What the FCRA amendments mean

What the FCRA amendments mean

The Bill amends the Foreign Contribution (Regulation) Act 2010 (FCRA 2010) to make several new provisions. The FCRA 2010 has already been amended twice.

india Updated: Sep 22, 2020, 23:48 IST
Zia Haq
Zia Haq
Hindustan Times, New Delhi
Minister of state for home Nityanand Rai, during a discussion in the Lower House, argued that the law needed to be updated further to “prevent the misuse of foreign funds” by those who receive it.
Minister of state for home Nityanand Rai, during a discussion in the Lower House, argued that the law needed to be updated further to “prevent the misuse of foreign funds” by those who receive it. (Diwakar Prasad/ Hindustan Times)

The Lok Sabha passed The Foreign Contribution (Regulation) Amendment (FCRA) Bill, 2020 on Sept. 21, amid concerns by voluntary organisations that the new changes will further tighten channels of funding from abroad.

Minister of state for home Nityanand Rai, during a discussion in the Lower House, argued that the law needed to be updated further to “prevent the misuse of foreign funds” by those who receive it.

The Bill amends the Foreign Contribution (Regulation) Act 2010 (FCRA 2010) to make several new provisions. The FCRA 2010 has already been amended twice. The first amendment was made by Section 236 of the Finance Act, 2016 and the second by Section 220 of the Finance Act, 2018.

Here’s the context of why the new changes are important and the backdrop in which they have been made. The annual inflow of foreign contributions has nearly doubled between 2010 and 2019. According to the government, many recipients of foreign funding have not utilised it for the purpose for which they were registered.

Opponents have argued the government has used the provisions to clamp down on political rivals as well as voluntary organisations.

The home ministry on July 8 set up an interministerial committee to oversee investigations into three trusts linked to the Gandhi family, for alleged violations, of among other laws, FCRA 2010. These trusts are the Rajiv Gandhi Foundation, the Indira Gandhi Memorial Trust, and the Rajiv Gandhi Charitable Trust. The trust has denied any wrongdoing.

In November 2019, the Central Bureau of Investigation (CBI) had raided the offices of the human rights organisation, Amnesty International, for alleged violation of FCRA. The organisation denied the charges.

The Centre has cancelled certificates of registration of more than 19,000 voluntary organisations between 2011 and 2019, according to home ministry data.

FCRA, 2010 was enacted to regulate the acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to “national interest”, according to the Statement of Objects and Reasons of the new Bill.

Under FRCA, election candidates, editor or publisher of a newspaper, judges, members of any legislature and political parties are prohibited from receiving foreign donations. The Bill adds public servants (as defined under the Indian Penal Code) to this list of prohibited persons.

A key amendment proposes to introduce the requirement of Aadhaar, the biometric ID, stating that applicants must now provide Aadhaar details of all its office-bearers as an identification document.

The Bill prohibits the transfer of foreign grants received by an entity to a partner organisation or an associated person, which is a usual practice.

Under FCRA, a registered person must accept foreign contribution only in a single branch of a scheduled bank but they may open more accounts in other banks to spend the funds.

The Bill says foreign contribution can now be received only in an account designated by the bank as “FCRA account” in a branch of the State Bank of India, New Delhi (as notified by the central government). No funds other than the foreign contribution should be received or deposited in this account.

Earlier, recipients of foreign grants could use 50% of the contribution for meeting administrative expenses. The Bill reduces this limit to 20%.

The Voluntary Action Network India, a representative body of development organisations, has urged the government to refer the Bill to a select or a Standing Committee of Parliament. “The Bill throttles the spirit of cooperation that had been ushered in earlier this year by the positive role played by development organisations in mitigating the lockdown and the Covid-19 pandemic by virtually making it impossible for NGOs to function.”

The Bill assumes that all NGOs receiving foreign grants are guilty, unless prove otherwise, it said.

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