The Supreme Court on Tuesday asked the Centre why it has tasked the Ministry of Home Affairs instead of the Ministry of Finance to check the inflow and outflow of foreign funds to non-governmental organisations under the Foreign Contribution (Regulation) Act, or FCRA, reported The Hindu.
A bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar posed the question on petitions challenging the amendments to the FCRA in September last year that have made the rules stricter.
The FCRA regulates foreign donations and ensures it does not affect the internal security of the country. The 2020 amendment made Aadhaar mandatory for all office-bearers of non-governmental organisations that seek foreign contributions.
The new rules require any organisation that wants to register itself under the FCRA to have existed for at least three years and to have spent a minimum of Rs 15 lakh on its core activities during the last three financial years for the benefit of the society.
The NGOs are also required to submit commitment letter from their donors, specifying the amount of foreign contributions and the purpose for which they are proposed to be given.
On Tuesday, Solicitor General Tushar Mehta claimed that inputs from the Intelligence Bureau have shown that foreign funds were being used to finance activities to destablise peace and security of the country. He added that inputs also suggested that the money was being used to train Maoists.
The petitioners have argued that the amendments severely restrict the use of foreign funds by NGOs for their activities as well as transferring funds to other philanthropic organisations within the country.
Mehta said that the home ministry was the best option to keep an eye on people at the organisations that are making foreign contributions.
Senior advocate Gopal Sankaranarayanan, representing the petitioners, countered the allegations on peace and security citing the example of the coronavirus pandemic, reported NDTV. Sankaranarayanan said that “half of the administration that has happened in the country during Covid is through NGOs”.
He said that the assuming all the NGOs were criminals and working against the sovereignty and integrity of the country was wrong.
The law also mandates that all NGOs can use the funds only for their the registered purposes. To this, the court asked if an NGO used the funds for a different activity, even if it was a registered purpose, would it “dilute” the law.
Mehta admitted that there have been instances when the activities for which an NGO was registered overlapped with other purposes. “NGOs engaged in educational activities like teaching of Sanskrit or Urdu may also fall within the ambit of ‘religious activity’,” the solicitor general said.
However, he argued that before the amendment, only a small portion of the foreign funds were used by NGOs for their registered objectives. He said that the amendments helped the government ensure that NGOs were spending foreign contributions for the “definite programmes” that they have been registered for.
“Once you [NGOs] get hundreds of crores of rupees as foreign funds, it has to be known that the money is being used for these purposes alone,” Mehta submitted.
The petitioners also contended that the new rules demanding that NGOs open a designated account in the State Bank of India’s main branch in Delhi where foreign contributions made to them would be deposited are cumbersome for non-profits working in rural India.
The solicitor general dismissed it as merely speculative.
“An organisation needs to only open an SBI account in the main branch in New Delhi to receive the funds,” he submitted. “It can open any number of operational accounts in any scheduled bank in its own locality to transfer the funds from the designated account in Delhi. There is no compulsion to come to Delhi.”
He added the rule was meant so that the government could know about the contributions made to the NGOs. Mehta said a law that is meant for public good could not be challenged just because it seemed cumbersome to some.
The court has reserved its verdict on the matter.
Criticism of FCRA
In October last year, United Nations High Commissioner for Human Rights Michelle Bachelet had expressed concern over the use of the Foreign Contribution Regulation Act to “stifle the voices” of activists and NGOs in India. Bachelet had urged the Narendra Modi government to safeguard their rights.
She had cited an example of use of the FCRA against human rights organisation Amnesty International India, leading to the shutting of its operations in the country.
On September 29, 2020, Amnesty International India had accused the Centre of having frozen its bank accounts as punishment for speaking out about alleged rights abuses. After its bank accounts were frozen, the organisation closed its India office.
The organisation, in a statement, had cited “reprisal’” from the government for winding down its operations. The group called the authorities’ action a part of an “incessant witch-hunt”, and said its “lawful fundraising model” was being portrayed as money laundering because Amnesty India had challenged the “government’s grave inactions and excesses.”
The move was widely criticised by various organisations. The United States, the United Kingdom as well as the European Union have also raised concerns about the government’s investigation into Amnesty International India.
India has defended its decision, saying that other countries should not “condone contravention of Indian laws by any entity”.