Date: 03/03/2023

Relevance: GS-2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Key Phrases: FCRA, NGO, Centre for Policy Research, Ministry of Home Affairs, Regulation and Control, Foreign Funding, NITI Aayog, Policy Research, Prior Permission.

Context:

• Recently, the Ministry of Home Affairs (MHA) has suspended the Foreign Contribution (Regulation) Act (FCRA) registration of the Centre for Policy Research (CPR), a Delhi-based think tank, for 180 days.

Key Highlights:

• The CPR’s office was surveyed by the Income Tax department on September 7, 2022.
  • The registration was suspended as prime facie violation of FCRA provisions was found.
• FCRA registration is mandatory to receive foreign funds.
  • The suspension means that the association will not be able to receive any fresh foreign donations or utilize the existing foreign donations without the Ministry’s clearance.
• Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
  • However, in 2017 the MHA, through the Finance Bill route, amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

What is the FCRA?

• The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
  • First enacted in 1976, it was amended in 2010 when a slew of new measures were adopted to regulate foreign donations.
• The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
• The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.
• Registered associations can receive foreign contributions for social, educational, religious, economic and cultural purposes.
• In 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.
  • It also said all such NGOs would have to operate accounts in either nationalized or private banks which have core banking facilities to allow security agencies access on a real time basis.

When is a registration suspended or canceled?

• The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days.
• Until a decision is taken, the association cannot receive any fresh donation and cannot utilize more than 25% of the amount available in the designated bank account without permission of the MHA.
• The MHA can cancel the registration of an organization which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.

Way Forward:

• There should not be any question of having undertaken any activity that is beyond the objects of association and compliance mandated by law.
• In light of the current MHA order, the CPR should explore all avenues of available recourse.
• The matter should be resolved in an appropriate manner and in the spirit of the constitutional values.

Conclusion:

• Foreign funding is needed by NGOs because there are few independent Indian sources.

Source: The Hindu

Mains Question:

Q. “Imposing restrictions on foreign funding is a necessity”. Analyze the statement in the context of FCRA registration suspension of CPR. (250 Words).