NGO Foreign Funding – FCRA

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Context:
  • GoI in has banned many NGOs-both domestic and Indian arm of foreign NGOs for violation of FCRA
  • Licences of about 14,000 of NGOs cancelled.
  • Ministry of home affairs (MHA) denied Missionaries of Charity group (an NGO founded by Mother Teresa) renewal of its FCRA license.
  • MHA has not yet scrutinised more than four-fifths of the applications of the 22,000-plus NGOs that have sought renewal of their FCRA license.
Why?
  • Many of them were found to be violating some provision of the FCRA act in some manner, for example Greenpeace India was banned for exceeding the cap on administrative expenditure.
  • Many NGOs were put on MHA’s watch list on request of the state government, e.g. Ford foundation was put on watch list on request of Gujarat government.
Pros of government actions:
  • It will help in countering activities which are detrimental to the economy. E.g. It is suspected that UK based groups are funding agitation against Kudaikunal power plant which is very crucial to energy need.
  • Will help in bringing transparency to finances of such NGOs and their activities. Out of 22 lakh NGOs only few filed tax return last fiscal year.
Cons of government actions:
  • Government can use these provisions to stifle NGOs which are against its policies.
  • Ford Foundation, Green Peace International etc. have substantial influence in international arena and thus it may impact India’s image.
What is the current practice in regulation of NGOs?
  • NGOs are regulated under FCRA and FEMA.
  • The Home Ministry monitors foreign funds donated to NGOs and organisations through the FCRA. And, FEMA is regulated by the Finance Ministry.
  • Currently, there are nearly 100 international NGOs and associations which receive foreign funds through their liaison offices and disburse them to NGOs across India. Few international donors are registered under FEMA but not the Foreign Contribution Regulation Act (FCRA), 2010.
  • Many NGOs and foreign donors do not want to register under the FCRA due to its stringent provisions.
  • NGOs have to prove that their work does not qualify as harmful to “public interest” or “national security”. The 2020 amendment of FCRA act of 2010 has left these terms undefined and ambiguous. This may lead to subjective interpretations on the part of MHA officials.
What Home Ministry wants?
The Home Ministry has asked the Finance Ministry to surrender its powers to monitor non-governmental organisations (NGOs) under the Foreign Exchange Management Act (FEMA). This move is aimed at bringing all NGOs which receive foreign contributions under one umbrella for better monitoring and regulation. It will help in better regulation of such funds.
Other Issue:
Foreign Firms can now fund political parties
What happened?
The government has admitted that the amended Foreign Contribution Regulation Act (FCRA), 2010, which they brought in through the Finance Bill route, will not only help foreign-origin companies to fund NGOs here but has also cleared the way for them to give “donations to political parties.”
Response from Opposition
  • This is subversion of democracy, the FCRA amendment was brought in through the Money Bill route and passed without any discussion in Parliament.
  • This reflects the government’s authoritarian character, it will only fulfil the agenda of certain people
Response from Western World
  • US, Germany etc. has called the Act and government’s actions arbitrary
  • They have called for a review of FCRA.

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