SC upholds new restrictions on receiving foreign funds

SC upholds new restrictions on receiving foreign funds

Subject: Polity

Section: Acts

Context: The Supreme Court upheld amendments introducing restrictions in the Foreign Contribution Regulation Act (FCRA) while holding that no one has a fundamental or absolute right to receive foreign contributions.

Observation of Court:

• No one can be heard to claim a vested right to accept foreign donations, much less an absolute right.
• Philosophically, foreign contribution (donation) is akin to gratifying intoxicant replete with medicinal properties and may work like a nectar. However, it serves as a medicine so long as it is consumed (utilised) moderately and discreetly, for serving the larger cause of humanity.
• The presence/inflow of foreign contribution in the country ought to be at the minimum level, if not completely eschewed. The influence may manifest in different ways, including in destabilising the social order within the country.
  • Unbridled inflow may destabilise sovereignty of the nation
• Unregulated inflow of foreign donations would only indicate that the government was incapable of looking after its own affairs and needs of its citizens
• The amendments do not prohibit inflow of foreign contributions, but are a regulatory measure to permit acceptance by registered persons or persons having prior permission to do so with condition that they must themselves utilise the entire contribution
• The court held that the restrictions in the amendments were “reasonable” and “founded on intelligible criteria”. It fixed accountability on the recipients, increased the efficacy of “continual supervision” over foreign contributions, did not discriminate and served the purpose of the FCRA 2010.
• Mere plea of inconvenience is not enough to attract constitutional inhibition. There is intrinsic evidence to indicate that the change effected by the amendments is to serve the legitimate government purpose and has a rational nexus to the object of the principal Act of 2010

Foreign Contribution (Regulation) Amendment, 2020:

• It seeks to prohibit ‘public servants’ from receiving any foreign funding.
• It proposes to reduce the use of foreign funds to meet administrative costs by NGOs from the existing 50 per cent to 20 per cent.
• It seeks to “prohibit any transfer of foreign contribution to any association/person”.
• It proposes to make Aadhaar cards a mandatory identification document for all office-bearers, directors and other key functionaries of NGOs or associations eligible to receive foreign donations.
• Another amendment mandates that every person (or association) granted a certificate or prior permission to receive overseas funds must open an FCRA bank account in a designated branch of the SBI in New Delhi.
• It seeks to allow for the central government to hold a summary inquiry to direct bodies with FCRA approval to “not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution”.

Foreign Contribution (Regulation) Act (FCRA), 2010:

• Under the Act, organisations require to register themselves every five years.
• As per the amended FCRA rules, all NGOs registered or granted prior permission under FCRA are now required to upload details of foreign contributions received and utilized by them every three months on their website or the FCRA website.
• NGOs now need to file their annual returns online, with the hard copy version dispensed with.