The Centre on Sunday proposed amendments to the Foreign Contribution Regulation Act, or FCRA, to make Aadhaar mandatory for all office bearers of non-governmental organisations that seek foreign contributions. The proposed stringent amendments also seek to bar public servants from receiving foreign funding.
This means any person who makes an application for prior permission, seeks registration under the FCRA, or wants to renew their FCRA licence, would first have to mandatorily furnish the Aadhaar numbers of all office bearers, directors or other key functionaries.
The Foreign Contribution Regulation (Amendment) Bill 2020, which was introduced in the Lok Sabha during Sunday’s session, also proposes to enable the Centre to allow an NGO or association to surrender its FCRA certificate. Besides this, the draft bill proposes to decrease administrative expenses through foreign funds by an organisation to 20% from the current 50%.
Under the proposed law, NGOs can receive foreign funds only in designated FCRA accounts in a State Bank of India branch in New Delhi. However, they may open one or more utilisation accounts in any banks of their choice. The bank’s branch would then report to the home ministry the prescribed amount of foreign remittance, the sources and manner in which it was received and other particulars.
It seeks to amend clause (c) of sub-section (1) of section 3 of the Act, to include “public servant” in the ambit of entities that are banned from accepting foreign funds. Currently, the restrictions under the Act apply to legislators, election candidates, print and broadcast media, judges, government servants or employees of any corporation or any other body controlled or owned by the government.
The Bill reasons there is a need to strengthen the Act because of several organisations’ “outright misappropriation or mis-utilisation” of the funds, which has led to the government cancelling 19,000 such registrations in the past few years.
“The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act,” the Bill’s statement of objects and reasons said.
“Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts,” it added. “This has led to a situation where the central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-governmental organisations, during the period between 2011 and 2019.”
The Bill added that the government has also initiated criminal proceedings against “dozens of such non-governmental organisations which indulged in outright misappropriation or mis-utilisation of foreign contribution”.
The government said the amendment was required to enhance transparency and accountability in the receipt and utilisation of foreign contributions worth thousands of crores of rupees every year and facilitating “genuine” non-governmental organisations or associations that are working for the welfare of the society.
The Centre has also sought to give itself considerable powers in deciding which organisation shall cease to utilise its funds. The Bill proposes to do this by amending Section 11 of the Act to give itself the power to stop organisations from using funds it has received, but not utilised. Till now, the government was in the position to take such action only after the person or association was “found guilty” of violation of the Act.
“Provided that the Central Government, on the basis of any information or report, and after holding a summary inquiry, has reason to believe that a person who has been granted prior permission has contravened any of the provisions of this Act, it may, pending any further inquiry, direct that such person shall not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution which has not been received or, as the case may be, any additional foreign contribution, without prior approval of the Central Government,” the amendment sought to Section 11 says in the Bill.
Besides this, the Bill also seeks to give the government the power to decide on the period of suspension beyond 180 days.
‘Fatal blow to civil society work’
The proposed amendments were criticised by civil society organisations, who said the Bill aims to stifle the nonprofit sector. “Devastating blow,” said Amitabh Behar, the chief executive officer of Oxfam India. “Red carpet welcome for foreign investments for businesses but stifling and squeezing the nonprofit sector by creating new hurdles for foreign aid which could help lift people out of poverty, ill health and illiteracy.”
The DevelopAid Foundation said the amendments to the FCRA only create more hurdles and paperwork, especially for charities that are already reeling “from too many disjointed rules”. “[The] proposed migration of all FCRA designated accounts to SBI New Delhi, needs to be thought through,” the group added. “How will charities and religious trusts spread across India open and manage accounts home-branched at Delhi?”
Biraj Patnaik, executive director of the National Foundation for India, called the proposed amendments a “fatal blow to civil society work”.
“These amendments will ensure that the ease of doing business for civil society organisations gets significantly curtailed, even as the ease of doing business continues to be enhanced for corporations working for profit,” Patnaik told The Print.
Patnaik said the amendment seeking to limit the use of foreign funds for administrative purposes “would impact research and advocacy organisations which use the funding to meet their administrative costs”.