Foreign Contribution Regulation amendment Act (FCRA), 2020

Background of Foreign Contribution Regulation Act (FCRA) 

  • The Foreign Contribution Regulation Act (FCRA) was first brought in by the Indira Gandhi government during the Emergency in 1976.
  • Its aim was to protect the ‘sovereignty’ of India from ‘foreign hands’ at a time when global powers were engaged in a cold war.
  • The law prohibited political parties, electoral candidates and even cartoonists from accepting foreign contributions.
  • In 2010, the government made the renewal of registrations mandatory every five years and placed a 50% limit on administrative expenses.

What the Key provisions of Foreign Contribution Regulation (Amendment)Act, 2020

  • Prohibition to accept foreign contribution: These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties.
  • Transfer of foreign contribution:
    • Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution.
    • FCRA registered organisations are barred from transferring foreign donations to smaller non-profits (a practice known as sub-granting) who often find it difficult to access donors on their own.
  • Aadhaar for registration: The Act states that a person may accept foreign contribution if they have obtained a certificate of registration from central government or obtained prior permission from the government to accept foreign contribution. The bill makes Aadhaar mandatory for registration.
  • Restriction in utilisation of foreign contribution: The Bill gives government powers to stop utilisation of foreign funds by an organisation through a “summary enquiry”.
  • Reduction in use of foreign contribution for administrative purposes: The bill decreases administrative expenses through foreign funds by an organisation to 20% from 50% earlier.
  • More power to government: FCRA registration can be suspended now after a summary enquiry and the period of suspension can extend up to a year (from 180 days earlier).
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