India’s Parliament Regulates Foreign Funding Rules

The Lower House of the Indian Parliament has approved a Bill by approving that drastically changes The Foreign Contribution (Regulation) Amendment Bill, 2020 on Sunday, September 20th. The Bill is aimed at making rules governing the foreign funding of non-government organizations (NGOs) more stringent and also mandating Aadhaar for all office bearers of these organizations.

The bill also seeks to bar government employees and judges from receiving foreign funds, and to prevent recipients from transferring funds to other organizations or individuals. The new bill also gives sweeping powers to the Centre to suspend the licence of any NGO, which could previously be suspended for 180 days under the original law, by an additional 180 days. And it reduces the amount of funds received that can be spent on administrative expenses to 20% from the previous 50%.

The 1976 Foreign Contribution (Regulation) Act was replaced by the 2010 Foreign Contribution (Regulation) Act, which was passed to “regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”[5]

Section 3(1) of the 2010 Act listed persons and entities barred from accepting foreign contributions, including candidates for election, members of any legislature, political parties or party officeholders, organizations of a political nature, and associations or companies engaged in the production or broadcast of audio news, audiovisual news, or current affairs programs.[6] No person or resident in India, and no citizen of India resident outside the country, is allowed to accept any foreign contribution or acquire or agree to acquire any currency from a foreign source on behalf of any political party, any person referred to in Section 3(1), or both. Delivery of currency from a foreign source is also prohibited under the Act.

The amendment (2020) passed this week by the Parliament seeks to make specific changes to the FCRA law, first introduced in 2010 by the UPA government and whose rules were amended in 2012, 2015 and 2019. The law provides the framework under which organizations in India can receive and utilise grants from foreign sources. This primarily affects the non-profit sector in India, comprising a wide range of organisations – NGOs that implement development projects, research organisations, civil society activists, etc.

Governments have argued that the receipt and use of foreign grant funds need to be regulated to ensure that they are not used to hurt the national interest. Nobody denies that there should be greater transparency when it comes to activities that are funded by foreign sources.

The Bill says the amendment is required to enhance transparency and accountability in the receipt and utilization of foreign contributions worth thousands of crores of rupees every year and facilitating the “genuine” non-governmental organizations or associations who are working for the welfare of society.
But is it too much to hope that the government will see NGOs and civil society organisations as genuine partners in India’s development journey? As demonstrated during the ongoing pandemic and the migrant workers’ crisis, NGOs and activists routinely make up for gaps in government programmers, by reaching the unreached, supplementing the quality and quantity of services provided, and speaking for those whose voices are marginalized.

Restraining non-profit organizations is equal to restraining democracy itself. But several elements of the FCRA rules and their vague definitions of national interest makes it hard to believe that the government sees this sector as an ally. The government has used the FCRA as an instrument for harassment of political rivals or activist organizations such as Amnesty International. Starting from environmental activism to religious activities – a wide range of organizations have come under the scanner of government authorities in recent years.

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