FCRA Regulations: Delaying the Path to Development

The Foreign Contribution Regulation Act was drafted in 2010 to regulate foreign aid from sources outside India.
Its goal was to prevent any misuse of funds for activities harmful to India’s national interests.

However, the question today is whether FCRA is protecting or blocking our nation’s interests?
Recently, foreign funds of about 6000 NGOs in India were stopped due to these regulations.NGOs, hospitals, schools, shelters, etc. were put to a halt. The poor and the neglected groups
are the worst hit.

This makes one wonder if FCRA regulations are justified or simply a political tool to suppress dissent?

What are the FCRA Regulations?

During the emergency era, the government felt that foreign powers were meddling in internal matters of India. They were using foreign contributions as tools to control civil society. Civil society in turn was influencing policy-making.
Hence, the FCRA came in 1976 to scrutinize all the foreign aid coming to India. The UPA government replaced the 1976 Act with the new law in 2010. The FCRA, 2010 included the following provisions:

1. All entities receiving foreign donations must register themselves under FCRA.
2. FCRA will provide licenses to these entities with five-year validity.
3. The entities must state the purpose for the foreign funds They must stick to the bona
   fide purpose.
4. The Ministry of Home Affairs(MHA) will be the nodal agency.
   However, the INSAF v. Union of India Case (2020) revealed some crucial loopholes in the
   act.

In this case, the Supreme Court highlighted that phrases like ‘political nature’ or ‘political activity ’ are being misused. The central government cannot arbitrarily use these phrases for shutting down NGOs.
This violates NGOs’ fundamental right to freely express their opinions (Article 19). This also threatens NGOs’ freedom to form associations.
Overall, FCRA regulations were challenging the very rule of law in the country. Therefore, an amended FCRA came in 2020 to address these concerns. Unfortunately, the new statute is even more draconian than before.

Foreign Contributions Regulation (Amendment) Act, 2020

The MHA claims that funds are being sent from abroad to purposefully hinder development projects. Sometimes, these funds even encourage internal security problems like the pro-Khalistan movement.
These were the arguments made by the government for an extremely rigorous FCRA, 2020.
The provisions of this act include:

1. Prohibition on re-granting:
   According to FCRA, 2020, the money received by one NGO cannot be granted to another person or group.
   This provision severely impacts the small-scale NGOs who are dependent on bigger NGOs for funds.
2. Stifling autonomy through licensing criteria:
   The license of NGOs is renewed only if certain criteria are met. These criteria are:
   ● The amount received is not fake or ‘Benami’
   ● The applicant is not a convict for creating communal tensions or religious conversions
   ● No prior history of wrongful usage of funds, etc.
   These criteria are extremely vague and open-ended in nature. This allows the government to
   easily curb any form of opposition posed by the NGOs.
3. Limited accounts for receiving donations:
   1. The act says that NGOs must receive donations in a designated ‘FCRA Account’. These accounts are prescribed by the government in a State Bank of India Branch in New Delhi.
   2. In effect, such funnelling of money simply increases the hassle for NGOs. It also discriminates between the NGOs based in Delhi and the rest.
4. Curtailing internal expenses:
   According to FCRA, 2020, NGOs cannot spend more than 20% of their aid on administrative
   expenses. Earlier this limit was 50%.
   This provision constrains the recruitment, research, and training capacity of the NGOs.
5. Suspension Period:
   The act allows the government to suspend the registration of NGOs for 180 days. This period
   can be further increased by another 180 days.
   In this light, one might wonder whether the FCRA regulates these NGOs or restricts them!

FCRA Regulations: A tyrannical reflection of mistrust in NGOs

The MHA claims that the premise of the FCRA is to prevent money laundering under the facade of charity work. But in reality, these regulations are simply choking opposition voices. For instance, licenses of those NGOs are particularly ceased which are fighting for environmental rights, civil liberties, etc.

Another goal of FCRA is to prevent internal security threats. Several intelligence agencies have reported that funds are being used to support problems like secessionist movements. What is truly threatened by these regulations is the smooth humanitarian work of NGOs.
The FCRA also aims to enforce the transparency and accountability of NGOs. But the number of compliances it requires is not ensuring financial transparency. Rather they are building an ecosystem of mistrust between the government and the NGOs.
This is certainly not a healthy sign for India’s social and economic betterment.

Conclusion

The International Court of Justice (ICJ) believes that the FCRA regulations can increase civil society’s harassment in India. In fact, the ICJ also requested the President of India to decline his assent to the FCRA bill.
UN Human Rights Commission along with several democracy tracking indices also highlight similar concerns. This shows that the FCRA regulations can weaken India’s credibility as a liberal-democratic nation.
The statute also weakens a combined front of government and other actors to fight poverty, illiteracy, and other social evils.
Hence, the government needs to recognize the role of NGOs in the development sector, instead of rivaling it. Revoking the draconian provisions of the FCRA, 2020 can be the first step toward such
recognition.