Funding the Fissures

Last year in 2020, the Foreign Contribution Regulation Act (FCRA) was passed by the Indian Parliament in the wake of several irregularities and violations of FCRA regulations by the NGOs and organisations receiving foreign funds. Before that, FCRA was in the news in 2019 when the United Kingdom-based NGO called Amnesty International was raided by the Central Bureau of Investigation (CBI) in Bengaluru and Delhi for its alleged irregularities in foreign funding, in violation of the provisions of FCRA 2010.

The Act aims at keeping a check on foreigners influencing the Indian electoral politics, journalists, public servants etc. for wrong purposes or activities detrimental to the public interest. Those violating provisions of FCRA can be jailed up to a term of five years.

The FCRA is the law that filters foreign contributions or foreign hospitality based on their utilisation into legal or illegal activities and regulates foreign donations and ensures that such contributions do not adversely affect internal security. It’s a brainchild of the Cold War era-to check election meddling in erstwhile Soviet Union and America in the global context. It’s an emergency-era law in the Indian context, first enacted on March 31, 1976. In its 1976 avatar, it was a tool to “regulate” foreign funding of political parties, electoral candidates, newspaper publishers, judges, cartoonists, etc. to keep it consistent with a sovereign and democratic republic’s values. In 1984, an amendment was made to the Act requiring all NGOs to register themselves with the Home Ministry.

In 2010, the Act was repealed, and a new act with strict provisions was enacted. Ministry of Home Affairs notified new rules under the FCRA, 2010 thereby amending the FCRA Rules, 2011. Under the new regulations; norms for farmers, students, religious and other groups who are not directly aligned to any political party and the groups who are not involved in active politics, have been relaxed.

FCRA registrations have been made more stringent. Any organisation that wants to register itself under FCRA shall be in existence for three years and should have spent a minimum amount of 15 lakh on its core activities for society’s benefit during the last three financial years.

However, the Central Government, in exceptional cases or cases where a person is controlled by the Central Government or a State Government may waive the conditions. Office bearers of NGOs or organisations seeking registration under the FCRA are required to submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it was being given. The amendment of 2010 expanded the law’s ambit by including “any organisation of political nature”. The FCRA 1976 focused on regulating the foreign funding of “political parties” only while the FCRA 2010 consists of all “organisations of political nature”. This definition — embracing an array of groups, including trade unions, women’s and civil rights outfits, farmers’ groups, even youth forums — allowed the government to scrutinise any foreign-funded organisation that it wanted. The amendment was followed by a lot of criticism and accusations that the government wants to suppress NGOs’ voice that could be critical of its moves.

FCRA 2010 is a consolidating act passed by the Government of India that seeks to regulate foreign contributions or donations and hospitality (air travel, hotel accommodation etc.) to Indian organisations and individuals and stop such contributions, damaging the national interest. To quote its “purpose” from the Act of 2010 itself – “It is an act to consolidate the law to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and matters connected therewith or incidental thereto”.

It is worth mentioning that since the Act is internal security legislation, despite being a law related to financial legislation, it falls into the Home Ministry’s purview and not the Reserve Bank of India (RBI).

All groups, associations and NGOs must register themselves under the FCRA with the Home Ministry if they wish to receive foreign contributions. The registration is initially valid for five years. The FCRA, 1976 provided for permanent registration, but now after the amendment of 2016, it’s for five years only. It can be renewed if they comply with all norms. Registered groups/NGOs can receive foreign funds for social, educational, religious, economic, and cultural purposes, but the filing of annual returns is compulsory on income tax lines. A provision was made to cancel registrations of NGOs if the Home Ministry believes that the organisation is political and not neutral. FCRA 2010 requires all the organisations to maintain a separate account to deposit the Foreign Contributions received. No other funds except for Foreign Contributions shall be deposited in that account. The banks would also be obligated to report to the prescribed authority, the number of foreign remittances received and other related details such as the source, manner of receipt etc.

A new clause was inserted which says that groups mentioned in Clause V and VI will only be considered a political group by the Centre if they participate in “active politics or party politics”.

Earlier, there was no restriction on spending foreign contributions under FCRA 1976, but FCRA 2010 made it mandatory to spend 50 per cent of the foreign donations on administrative costs.

In the wake of realisation that foreign-funded NGOs are not fully appreciative of development challenges of the nation, in 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds does not disrupt communal harmony in the nation and is not likely to affect the sovereignty and integrity of India or impact friendly relations with any foreign State. It also said all such NGOs would have to operate accounts in either nationalised or private banks with core banking facilities to allow security agencies access on a real-time basis.

The foreign inflow has almost doubled in the last decade; however, the entities receiving the funds aren’t using it for the declared purpose as per the government. So the bill was amended by Indian Parliament in 2020 again. In FCRA 2020, only 20 per cent of the foreign funds can be used for administrative purposes while the limit was 50 per cent in FCRA 2010.

Though this may hamper the workings of several small NGOs who depend on such funds, the new provisions have been envisaged for a greater good. That is to enhance the transparency and accountability in foreign funds inflow and utilisation of foreign contributions and facilitate the genuine NGOs working for society’s welfare. The bill also makes Aadhar number mandatory for recipients (passport or OCI card will be used as the identification document in case of foreigners).

Though the FCRA act prohibits members of the legislature, political parties, government officials, judges and media persons from receiving any foreign contribution, but 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 per cent or more shares. The amendment led to accusations that the Bharatiya Janata Party (BJP) and the Congress had been receiving foreign funds for political activities from the United Kingdom-based Vedanta Group from 2004 to 2012. A public interest litigation petition was filed at the Delhi High Court in 2013 against both parties for violating FCRA norms by accepting foreign funds. In 2014 Delhi HC held both BJP and Congress accountable for violating FCRA norms, but both parties challenged the High Court order, which had termed the donations illegal in 2014, and moved to the Supreme Court. They withdrew the petitions after the FCRA was amended retrospectively.

The loopholes in FCRA have been widely exploited by mainstream political parties to purchase political support, score political vendetta, curb political dissent, and curb freedom of speech and expression.

• Foreign fundings for supporting conversion activities.
• Foreign fundings to influence government policies and judicial trends.
• Foreign fundings to influence academia.
• Utilisation of foreign funds under misleading headings like research and its impact.

Though the MHA reserves the power to suspend an FCRA registration initially for 180 days if any adverse input is found against the association’s functioning, the association cannot receive any new donation until a decision is taken. It cannot utilise more than 25 per cent of the amount available in the designated bank account without the MHA’s permission. According to MHA data, since 2011, the registration of 20,664 associations was cancelled for violations such as misuse of foreign contribution, non-submission of mandatory annual returns and diversion of foreign funds for other purposes. As on September 11, 2020, there are 49,843 FCRA-registered associations.

Notwithstanding the present Central Government’s best efforts to tighten and enforce the law, foreign contributions’ quantum continues to rise without hindrance, leading to ever-increasing undue foreign interference in our internal affairs. There has been an exponential increase in foreign funds in India under FCRA. In 1994-95, it was almost 2,000 crores. Within a span of some 20 years, in 2016-17, the foreign funding increased manifold, amounting to 18065 (Data source: PIB Press Release dated June 1, 2018, of MHA) of crores of rupees. Over Rs 58,000 crore foreign funds were received by NGOs registered under the FCRA between 2016-17 and 2018-19.

But what’s even more worrisome is the profile of the recipients of the foreign funds. More than 20 per cent of the recipient groups have affiliations with organisations that are engaged in conversion-related activities and using the funds for religious purposes. In September 2020, FCRA licenses of 13 such NGOs were cancelled by MHA. Bank accounts of these NGOs were frozen after intelligence inputs pointed out their conversion-related activities targeting the tribal areas of several states, including Jharkhand.

The Opposition and NGOs are rattled due to strict rules. Little wonder and the Modi Government has been accused of curbing civil society groups’ welfare initiatives. They say that the involvement of NGOs in grassroots activities means NGOs can raise uncomfortable questions, hold the government accountable and enforce corporate responsibility but the government seems determined to curb illegal activities carried out by these NGOs.

Since Modi Government has come into power, it has cracked down on many bigwig foreign donors such as the United States-based Compassion International, Ford Foundation, World Movement for Democracy, Open Society Foundations and the National Endowment for Democracy. The donors have been placed on a ‘watch list’ or in the ‘prior permission’ category, barring them from sending money to associations without the MHA’s clearance. These NGOs had received annual contributions from foreign countries amounting to hundreds of crores, and most of them are the powerhouse of Leftists. The foreign inflow in India via NGOs is such a big issue that a ban on Colorado-based donor Compassion International caused tensions in Indo-US relations at a time. The then US secretary of state John Kerry also, during his visit in 2017, tried to convince then External Affairs Minister Sushma Swaraj to reconsider the decision. The Union Home Ministry then said that crores of rupees given to Caruna Bal Vikas by Compassion International were being used for conversion activities to NGOs owing allegiance to the Methodist Church, Baptist Church, Salvation Army, Christian Missionary Society and Indian Pentecostal Church, in violation of the law.

Many of these organisations receiving humongous amounts of foreign funding and involved in religious conversions are centred around Delhi, Kerala and West Bengal. This is no rocket science to understand that obviously, they’re not doing it for free. As the famous American saying goes, there are no free lunches. “The charter of Hindu demands” has rightly mentioned the ill effects of foreign inflow under FCRA; that Foreign charity comes with stated or implied purposes to subvert our society, to change demographics, to create conditions for the break-up of our country, to foment social unrest, to create hurdles in our social, economic and technological progress, to colonise our minds to suit the sinister foreign purposes and so on. Large amounts of funding for the so-called non-profit or non-commercial sector in India are generated by overseas remittances from organisations affiliated with foreign Governments and varied foreign non-State actors. It is no secret that much of this funding is often used to create extraordinary influence both subtle as well as obvious, on the executive, legislative, judicial processes of our country, on the pretext of either humanitarian or social intervention. In contrast, it intends to subvert the natural democratic process of India and the national discourse. Unsurprisingly, the recipients of foreign charity often act in both covert and overt ways to destabilise our society for their foreign masters’ sinister designs.

Given that we, as a Nation, have rightly been refusing foreign aid even for natural disasters on the grounds of national pride, we should also refuse foreign contributions that are funding the country’s break-up. We can generate all money required for relief, rehabilitation, religious and charitable works and even for lobbying from within the country.

Though now, the MHA has toughened rules for NGOs intending to seek foreign funding. In November 2020, an MHA notification said that the office bearers of the NGOs seeking registration under the Foreign Contribution (Regulation) Act must submit a specific commitment letter from the donor indicating the amount of foreign contribution and its purpose it is proposed to be given. But it is imperative to impose a blanket ban on all sorts of foreign funding to NGOs or groups in India. This is the only way to deal with this menace since loopholes can otherwise always be found in any law however well-intentioned and well-drafted it may be. India has recognised valuable contributions of its diaspora who have emotional connect with their former homeland. Hence, the only funding from abroad which can be allowed could be by Overseas Citizens of India (OCIs) in their capacity, and not as a conduit for institutional funds, that too for limited purpose of promotion, research and teaching of traditional Indian knowledge and ancient Indian texts. The philanthropic-minded non-OCI foreigners and the OCIs who want to contribute for purposes other than promotion, research and education of traditional Indian knowledge and ancient Indian texts, are welcome to send their contributions to the Prime Minister’s Relief Fund.

So the enactment of “The Foreign Contributions (Prohibition) Act” by repealing the Foreign Contributions (Regulation) Act, 2010 to completely ban all sorts of foreign contributions except those by the OCIs as mentioned above, is justified. In India, FCRA is a by-product of the emergency era. In reality, The FCRA was introduced by Indira Gandhi not to maintain the sovereignty of the nation but to curb the political dissent.