Curbs on Foreign Funding Under FCRA


    In News

    • According to an internal RBI notice, 10 foreign NGOs had been placed in the Prior Reference Category (PRC) of the Foreign Contribution Regulation Act (FCRA), 2010.
      • Recently, the government has made both banks and chartered accountants accountable for any unauthorised funds that come through.

    Foreign Contribution (Regulation) Act (FCRA)

    • FCRA act regulates foreign funding of persons in India 
    • It is implemented by the Ministry of Home Affairs.
      • Certain individuals are allowed to accept foreign fundings without the approval of MHA. 
      • However, the accepted monetary limit of such foreign contribution is less than Rs. 25,000.
    • Under the Act, the recipients of contributions need to adhere to the stated purpose for which such contribution has been obtained.

    Prior Reference Category (PRC) of the Foreign Contribution Regulation Act (FCRA), 2010:

    • Prior Reference Category implies that to donate to such an NGO, a foreign donor has to take prior clearance from the Ministry of Home Affairs.
    • The MHA’s Foreigners Division of the FCRA wing is responsible for giving such clearance.

    NGOs under PRC: History and Current

    • 5 years ago, the registration of the international NGO Greenpeace was cancelled to receive foreign funds.
    • Presently the government has moved to restrict the funding for a group of 10 American, Australian and European NGOs dealing with issues related to
      • environment, 
      • climate change and 
      • child labour.
    • The 10 NGOs are 
      • The European Climate Foundation; 
      • U.S.­based Omidyar Network International, Humanity United and Stardust Foundation; 
      • Australia­ based Walk Free Foundation and Minderoo Foundation; 
      • U.K.­based Children’s Investment Fund Foundation, Freedom Fund and Laudes Foundation, 
      • U.K./UAE ­based Legatum Fund. 
    • There are more than 80 international voluntary agencies on the PRC list of the government as of now.
    • According to the MHA, between 2016 and 2020, the government cancelled the FCRA licences of more than 6,600 NGOs and suspended those of about 264.
      • Among those who have been put on the PRC list or had to downsize or even shut down their Indian operations due to FCRA action by the government in the last few years are
        • Greenpeace International, 
        • Amnesty International, 
        • Human Rights Watch, 
        • Compassion International, 
        • National Endowment for Democracy, 
        • U.S. Centre for Disease Control (CDC), 
        • Open Society Foundation.

    Need of such steps

    • Unnecessary International Criticism:
      • Significantly all the NGOs on the latest list work on climate change and environmental projects and/or child rights and slavery projects.
      • These are the subjects where the government has been sensitive to international criticism.
    • International Pressure regarding Law Making and over-compliance:
      •  Despite India’s record in complying with the Paris agreement, global pressures are intensifying on India to raise the Nationally Determined Contributions.
      • It is detrimental to the Indian image and poverty reduction plans.
    • NGOs involved in violation of FCRA:
      • Several pro­climate NGOs are focusing on advocacy against coal in the media.
      • It is considered a violation of FCRA provisions. 
    • Biased data and poor ranking on several Indices:
      • In 2017, the International Labour Organisation’s Global Slavery Index ranked India 53rd of 167 countries where 
        • “modern slavery” was prevalent, and 
        • as the country with the highest number of people in forced labour.
      • MHA questioned the credibility of the data.
    • Internal Security:
      • 3 US non-governmental organisations were found to be fuelling protests at the Kudankulam Nuclear Project Site after strained Indo-US relations.

    Criticism of These Steps

    • Non-Achievement of SDGs and Foreign Aid/ Donations:
      • The donations to NGOs form a significant chunk of funds for social work which will not be available once they flee.
    • Killing of entire Social Sector:
      • Over-regulation is the evil that kills almost every industry.
      • An increase in Compliance Cost is the greatest hurdle due to over-regulation.
    • Incompatible with International laws:
      • United Nations Human Rights Council resolution on protecting Human Rights 
        • It says that no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding.
    • Unconstitutional (Violation of Art 19 (1)):
      • It violates constitutional provisions to respect and protect the rights to freedom of association, expression, and freedom of assembly.
    • Livelihood of workers associated with NGOs:
      • Many workers will be rendered unemployed.

    Conclusion and Way Forward

    • A U.K.­based NGO Commonwealth Human Rights Initiative (CHRI) has now taken the government to court for suspending its FCRA licence.
      • It won temporary relief in the Delhi High Court in allowing it to access 25% of its funds
      • A final order is expected in October.
    • So, the government too should adopt a middle path by sticking to the principle of Vasudhaiva Kutumbakam as the framework to deal with international organisations.
      • Their work should be treated as the eyeopener rather than considered as the one with malicious intent.
    • One way out can be setting up an independent regulatory body rather than the government itself to ensure transparency and accountability.

    Source: TH