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Brain-booster / 29 Nov 2021

Brain Booster for UPSC & State PCS Examination (Topic: FCRA amendment and the dissent)

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Why in news?

  • Amendments in Foreign Contribution (Regulation) Act,2010 were introduced in 2020.It aimed at curbing the foreign funds received by NGOs. Various groups have challenged the validity of the amendment in Supreme Court.

Erstwhile Modus operandi

  • Since 1976, foreign donations received by individuals and organisations have been regulated by law. Later Foreign Contribution (Regulation) Act, 2010 was passed.
  • In 2020,FCRA was amended to introduce some new restrictions.

Need of the amendments:-

  • According to government, many recipients were wanting in compliance with provisions relating to maintenance of accounts and filing of annual returns.
  • Many didn’t utilise the funds received for the intended objectives.
  • Cancellation of 19,000 FCRA registrations was carried out.
  • It said that the annual inflow as foreign contribution almost doubled between 2010 and 2019

Amendments:

  • Act completely prohibits the transfer of foreign funds received by an organisation to any other individual or association.
  • Every person or association granted a certificate to receive overseas fund must open an FCRA bank account in a designated SBI branch in New Delhi. All the funds would be received only in this branch.The designated bank will give government every detail of the foreign remittance.
  • Aadhar number of the key functionaries will be available to the government.
  • Administrative expenditure have been reduced from 50% to 20%

Verdict:-

  • The Supreme Court has reserved the judgement on petitions challenging the validity of amendments introduced.

Disapproval to changes:

  • NGO’s have termedthe amendments harsh and arbitrary.
  • No rational link between designating a particular branch of a bank with the objective preserving national interest.
  • Recipients cannot fund other organisations.
  • When foreign help is received as objects, it’ll be impossible to share the aid if the recipient NGO do not have the means to distribute on it’s own.

Government’s stand:

  • Amendments were necessary to prevent non-state actors and foreign states from interfering with India’s internal matters and polity.
  • Diversion of funds and malpractices by NGO’s can be prevented by the amendments introduced.
  • The provision of the designated bank will help in monitoring of the flow of funds.