government-tables-bill-to-amend-foreign-contribution-regulation-act

 

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Context: The Foreign Contribution (Regulation) Amendment Bill, 2020, was introduced in the Lok Sabha. 

Salient features of the Bill:

  • Amends the Foreign Contribution (Regulation) Act: 
    • FCRA regulates foreign donations and ensures that such contributions do not adversely affect the internal security of the country. 
    • The Act, first enacted in 1976 was amended in the year 2010.
  • Aadhaar mandatory: It proposes to make Aadhaar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO or an association eligible to receive foreign donations.
    • The Bill says it is required to enhance transparency and accountability in the receipt and utilisation of foreign contributions.
    • Criticism: Opposing the clause in Bill that makes Aadhaar mandatory, the opposition cited a Supreme Court judgment that prevents the government from doing so.
  • Bars public servants: It provides that no foreign contribution shall be accepted by any public servant. 
    • Earlier it was restricted to legislators, election candidates, journalists, print and broadcast media, judges, government servants or employees of any corporation or any other body controlled or owned by the government.
  • Prohibits transfer of foreign contribution: It provides that every person who has been granted certificate or prior permission under Section 12 shall receive foreign contribution only in an account designated as ‘‘FCRA Account’’ which shall be opened by him in such branch of the State Bank of India at New Delhi.
  • Government has powers to stop utilisation of received but unutilised funds following a “summary enquiry”. 
    • Earlier it was supposed to be done only after the person or association has been “found guilty” of violation of the Act.
  • Suspension of registration under the Act: It gives the government the power to decide on the period of suspension beyond 180 days.
  • Administrative expenses: Not more than 20% of the total foreign funds received could be defrayed for administrative expenses. 
    • At present the limit is 50%.

Background:

  • The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019.
  • Misutilization:
    • Many NGOs have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act. 
    • Many of them did not ensure basic statutory compliances such as submission of annual returns and maintenance of proper accounts. 
  • Punitive actions:
    • Then the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations along with the starting criminal investigations, between 2011 and 2019. 

Foreign Contribution Regulation Act (FCRA), 2010

  • It seeks to regulate the foreign contributions or donations to organizations and individuals in India .
  • The Act aims to curb such contributions which might be detrimental to the national interest.
  • Any organisation, association or NGO in India cannot receive foreign funds if they do not have a license under the FCRA.
  • It falls under purview of the Home Ministry as it is an internal security legislation despite being a law related to financial regulation.
  • Salient Features of 2010 Act -
    • All funds received by a NGO must be used only for the purpose for which they were received.
    • Such funds must not be used in speculative activities identified under the Act.
    • It prohibits receipt of foreign contribution “for any activities detrimental to the national interest”. 
    • The government can refuse permission if it believes that the donation to the NGO will adversely affect “public interest” or the “economic interest of the state”.
    • Foreign contributions can be received after registering with the central government or taking  prior permission of the Central Government.
    • Under the Act, organisations are required to register themselves every five years.
    • For Registration under FCRA an Association:
      • must be registered (under the Societies Registration Act, 1860 or Indian Trusts Act 1882 or section 8 of Companies Act, 2013 etc.)
      • normally be in existence for at least 3 years.
      • has undertaken reasonable activity in its field for the benefit of the society.
      • Has spent at least Rs.10,00,000/- (Rs. ten lakh) over the last three years on its activities.
    • Foreign contribution cannot be accepted by any:

(a) a candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner, printer or

publisher of a registered newspaper;

(c) Judge, government servant or employee of any Corporation or any

other body controlled on owned by the Government;

(d) member of any legislature;

(e) political party or office bearer thereof;

(f) Association or company engaged in the production or broadcast of audio news, audio visual news or current affairs programmes through any electronic mode

(g) Any other individuals or associations who have been specifically prohibited by the Central Government

  • No funds, other than foreign contribution shall be deposited in the FC (Foreign Contribution) account to be separately maintained by the associations etc.
  • Every bank shall report to such authority, as may be prescribed, the amount of foreign remittance received, sources and manner and other particulars.
  • Provision has been made for inspection of accounts if the registered person fails to furnish or the intimation given is not in accordance with law.
  • As per the amended FCRA rules -
    • NGOs now need to file their annual returns online, with the hard copy version dispensed with. 
    • The annual returns must be placed quarterly on the NGO’s website or the FCRA website maintained by the home ministry.

 

After reading this article, answer the following question for Mains answer writing practice. Also you can get your answer checked free of cost by clicking on the following link.

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Q) Discuss the recent amendments to the Foreign Contribution (Regulation) Act (FCRA) and the need for such amendments. (250 words)