Context: The Supreme Court held that an organisation cannot be branded Political and henceforth penalised in the form of depriving it  of its right to receive foreign funds.


Indian Social Action Forum (INSAF) filed a petition challenging certain provisions of the Foreign Contribution Regulation Act (FCRA), 2010 and the Foreign Contribution (Regulation) Rules of 2011,

  • The Central Government is conferred with unguided and uncanalised power under these Laws to brand organisations ‘political’ and shut down their access to foreign funds. 

Provisions of FCRA Challenged in INSAF case

Section 5 (1) of the FCRA 

  • This provision allows the Centre a free hand to decide whether a seemingly non­political organisation was actually political in nature.
  • INSAF argued that Section 5(1) was vague and thus unconstitutional. 

 Section 5 (4) of the FCRA 

INSAF argued that the provision did not exactly identify the authority before which an organisation could represent its grievance. 

In conclusion, The apex court dismissed the contention made against both these provisions of FCRA.

More on the Verdict

  1. Pertaining to the organisations of farmers, workers, students, youth based on caste, community, religion, language, etc. that use legitimate forms of dissent” like bandh, hartal, road roko or jail ‘bharo’ to aid a public cause.
    1. It ruled that foreign funding for such organisations could continue as long as these organisations worked for the social and political welfare of society.
  2. However, it added a caveat too that the foreign funding pipeline could be choked if an organisation took recourse to these forms of protest to achieve a political end.
    1. Organisations with avowed political objectives in its memorandum of association or bye laws cannot be permitted access to foreign funds.  
    2. It concluded such organisations to be clearly of political nature.



FCRA came into being after an act was passed for the same by the parliament in 2010.

  1. The mandate of the act includes regulation of receipt of foreign contribution or foreign hospitality and subsequent utilisation of it by NGOs in India.
  2. The act in spirit seeks to prevent use of external finances to harm the National interest.
  3. The act involves an element of Internal Security, so the Ministry of Home affairs takes charge of it rather than the popular perception of it being under the realm of RBI.  

Definition of Foreign Contribution

  • Foreign contribution is defined as receipts in the form of 
    • Currency
    • Articles which are not received as gift for personal use
    • Securities received from foreign sources. 
  • Foreign hospitality is seen as any offer which seeks to provide foreign travel, boarding, lodging, transportation or medical treatment cost .
    • The offer should come from a foreign source to be considered as foreign hospitality

Person/Entities eligible for receipts under FCRA

The provision for the act permit only those NGOs 

  • Which are having a definite cultural, economic, educational, religious or social programme. 
  • Registered with the Home Ministry
  • Keeping an account of foreign donations
  • Conducting an audit and subsequent submission of the report to the Home Ministry.

Person/Entities debarred from receipts under FCRA

  • People associated with registered newspapers such as Editors, Publishers
  • Political parties
    • Candidates who are contesting an election
    • Members who are part of any legislature
  • Judicial Authorities like judges
  • Individuals employed in Government service.

Image Source: The Hindu