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2023-03-03

02:54 am

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The Centre for Policy Research (CPR) had its Foreign Contribution Regulation Act (FCRA) licence suspended by the government after the Income Tax department conducted "surveys" on CPR, Oxfam India, and the Independent and Public-Spirited Media Foundation (IPSMF) five months prior. The suspension followed indications of possible funding norm violations discovered during the investigations.

What is the FCRA?

  • The FCRA was enacted during the Emergency in 1976 due to concerns about foreign powers interfering in India's affairs by providing funding through independent organizations.
  • The law aims to regulate foreign donations to individuals and associations so that they operate "in a manner consistent with the values of a sovereign democratic republic." Parliament expressed concerns about this issue as early as 1969.
  • An amended FCRA was enacted in 2010 under the UPA government to consolidate the law on the utilization of foreign funds and to prohibit their use for activities detrimental to national interest.
  • The current government further amended the law in 2020, granting tighter control and scrutiny over the receipt and utilization of foreign funds by NGOs.
  • Under the FCRA, those seeking to receive foreign donations must register under the Act, open a bank account for the receipt of foreign funds in State Bank of India, Delhi, and utilize those funds only for the purpose for which they have been received, as stipulated in the Act. Annual returns must also be filed, and funds cannot be transferred to another NGO.
  • The Act prohibits the receipt of foreign funds by political parties, members of the legislature, election candidates, judges, government servants, journalists and media houses, and organizations of a political nature.
  • In July 2022, the Ministry of Home Affairs made changes to FCRA rules through two gazette notifications. The number of compoundable offenses under the Act increased from 7 to 12, and there was an exemption from intimation to the government for contributions less than Rs 10 lakh (the previous limit was Rs 1 lakh) received from relatives abroad.
  • The new rules state that political parties, members of the legislature, election candidates, judges, government servants, journalists, and media houses who are prohibited from receiving foreign contributions will not be prosecuted if they receive foreign contributions from relatives abroad and fail to inform the government within 90days. However, they will be required to pay 5% of the foreign contribution received.


 How is FCRA registration granted?

  • FCRA registration is granted to NGOs that wish to receive foreign funds after applying online in a prescribed format with the necessary documentation.
  • Individuals or associations that have specific cultural, economic, educational, religious, and social programs are eligible to apply for FCRA registration.
  • After the NGO submits the application, the Ministry of Home Affairs (MHA)inquiries into the applicant's background through the Intelligence Bureau and processes the application accordingly.
  • The applicant should not be fictitious or benami, should not have been prosecuted or convicted for inducing or forcing conversion from one religious faith to another directly or indirectly.
  • The applicant should also not have been prosecuted or convicted of creating communal tension or disharmony, found guilty of diverting or misusingfunds, or involved or likely to be involved in propagating sedition.
  • The MHA must approve or reject the application within 90 days, and if it fails to do so, it should notify the NGO of the reasons for the delay.

 

For how long is approval granted?

  • Validity of approval:FCRA approval is valid for a period of five years from the date of its grant.
  • What happens when an NGO's FCRA registration expires? If an NGO's FCRA registration expires, they are no longer allowed to receive foreign funds or use their existing funds without obtaining permission from the ministry. To continue receiving foreign funds, NGOs must apply for renewal within six months of the registration's expiry date.
  • Can NGOs whose registration has expired still apply for renewal? If an NGO fails to apply for renewal within the six-month period, their registration is considered to have expired. However, the Ministry of Home Affairs allows NGOs to submit a petition with valid reasons for not applying within four months of the expiry date. In such cases, their application for renewal can be reconsidered.
  • Why do some NGOs not apply for renewal? NGOs may not apply for renewal due to various reasons, including completion of the project for which the FCRA registration was obtained or the NGO's dissolution.

 

On what basis is approval cancelled?

  • The government can cancel an NGO's FCRA registration if it is found to violate the Act.
  • Reasons for cancellation include false statements in the application, violation of terms and conditions, lack of activity in the chosen field for two consecutive years, becoming defunct, or cancellation being necessary in the public interest.
  • Irregularities in the finances of an NGO can also lead to cancellation.
  • The FCRA requires that the NGO be given a chance to be heard before its registration is cancelled.
  • If an NGO's registration is cancelled, it cannot apply for re-registration for three years.
  • The ministry can suspend an NGO's registration for 180 days pending inquiry and freeze its funds.
  • Any government order can be challenged in the High Court.

 

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