The debate over Foreign Contribution (Regulation) Act, FCRA :  Let’s understand the issue (GS 3, Economics, The Hindu, Indian Express, PIB)

The debate over Foreign Contribution (Regulation) Act, FCRA :  Let’s understand the issue (GS 3, Economics, The Hindu, Indian Express, PIB)

The debate over Foreign Contribution Act- Today Current Affairs

News/ Context: The  Central home ministry  foreign contribution Regulation Act registration of Missionaries of Charity.  Earlier to this the ministry had issued a statement in which it was said that “some adverse inputs were noticed”and because of which the registration was not renewed. 

Foreign contribution Regulation Act registration is mandatory to receive  foreign  donations. Missionaries of Charity  like many other civil organizations and NGOs receive foreign donations to run its day to day business. The Missionaries of Charity is a Catholic religious congregation which was set up by Nobel Laureate Mother Teresa.

The UK Parliament also  debated the issue And asked the British government whether it had raised the issue with India of blocking the Overseas funds for  Missionaries of Charity and other NGOs. 

At present there are nearly 6000  NGOs whose registration has ceased to exist from january 1 as the Ministry of Home Affairs had refused renewal application for registration. Some of the organizations that lost their registrations include the Missionaries of Charity, set up by Nobel laureate Mother Teresa, the Medical Council of India, the India Islamic Center, the Oxfam India Trust and Common Cause, which have filed several PILs against central legislation in recent times.

What is FCRA ? Foreign Contribution (Regulation) Act, 1976 was enacted in order to regulate the acceptance and regulation of foreign contribution or foreign hospitality. The Foreign Contribution (Regulation) Act, 2010  repealed and replaced the FCRA, 1976. 

The Foreign Contribution (Regulation) Act, 2010 came into effect on first my 2011 along with foreign contribution regulation rules 2011. 

Under FCRA 1976 there was a concept of the deemed prior permission in which if an application of prior permission is not disposed of within 90 days from the date of receipt of such application then the permission prayed in that application would be  deemed to be granted. The deemed prior permission granted under FCRA, 1978 will remain valid for a period of 5 years from the date of commencement of the Foreign Contribution Regulation Act, 2010 after which it will have to be renewed. There is no such concept of deemed prior permission in FCRA,2010. It has to be now proper prior permission. The Hindu Analysis.

The Origins of FCRA : The original  FCRA was enacted in 1976 by Indira Gandhi led government during the Emergency. It is alleged that the government wanted to prohibit Electoral Candidates, Political Parties, Judges, MPs and even cartoonist from accepting foreign contributions/foreign funds/foreign donations so as to clamp down on political dissent. The inclusion of cartoonists suggests the same.                                                                                              The justification given for the law was to curb foreign interference in domestic politics. This was the period of cold war era when both American and Soviets to secure their strategic interest meddled in the internal affairs of post-colonial nations. 

Both Congress and Bharatiya Janata Party  pulled up by Delhi High Court  in 2014 for violating the SCRA as they had expected contributions from the Indian subsidiaries of London-based multinational Vedanta. The high court ordered  the election commission and the government to take action against both the parties. In the financial bill of 2016 ( one of the various budget documents) a section Was added that amended the relevant sections of FCRA, 2010, So what was Hitler to a foreign company now became an Indian company.  This amendment was brought with retrospective effect, and legitimized the FCRA violations by the two parties. This also opened the doors for all political parties to accept funding from foreign countries if it is channeled through an Indian subsidiary. The Hindu Analysis.

What is new in the FCRA 2010 : Firstly the registration under the FCRA 1976 was permanent but under the new one of 2010, it expired after 5 years and has to be renewed afresh. Secondly, the new law put a cap on the proportion of foreign foods that could be used for administrative expenses which is 50%, thereby allowing the government to control how a NGO/ Civil society organization spends its money.  is that while 1976 law was primary targeting political parties the new law of 2010 shifted focus to organizations of a political nature. 

Any organization which habit will engages itself  bandh hartal restaurant railroad aur jail bharo in support of public houses can be considered as organization of a political nature. For example student union, Trade union, youth forums, worker unions, farmers organization, youth organization based on caste community religion language etc  could be an count. 

The essence of the Act of  1976 was to protect the values of a sovereign democratic republic whereas the Act of 2010 was for, to prohibit any activities detrimental to the national interest.  Thus it (national interest) required certain associations, companies or individuals to be prohibited from accepting foreign contributions. 

In a recent judgment in Indian Social Action Forum (INSAF) v. UOI, the Supreme Court has held on 6th March 2020 :“The object sought to be achieved by the Act is to ensure that Parliamentary institutions, political associations and academic and other voluntary organizations as well as individuals working in the important areas of national life should function in a manner consistent with the values of a sovereign democratic republic without being influenced by foreign contributions or foreign hospitality. The long title of the Act makes it clear that the regulation of acceptance and utilization of foreign contribution is for the purpose of protecting national interest. Candidates for election and political parties or office bearers of political parties are barred from accepting any foreign contribution. The legislative intent is also to prohibit organizations of a political nature from receiving foreign contributions.”

The Supreme Court differentiated between the nature of an organisations and further held that: The Hindu Analysis

“A balance has to be drawn between the object that is sought to be achieved by the legislation and the rights of the voluntary organisations to have access to foreign funds…Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected. On the other hand, such of those voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions. Therefore, such of those organisations which are working for the social and economic welfare of the society cannot be brought within the purview of the Act or the Rules by enlarging the scope of the term ‘political interests’… The Hindu Analysis

…Support to public causes by resorting to legitimate means of dissent like bandh, hartal etc. cannot deprive an organisation of its legitimate right of receiving foreign contribution. It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action. Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature. To save this provision from being declared as unconstitutional, we hold that it is only those organisations which have connection with active politics or take part in party politics, that are covered by Rule 3(vi). To make it clear, such organisations which are not involved in active politics or party politics do not fall within the purview of Rule 3(vi).”

By this verdict, the apex court has tried to strike a balance between organizations supporting public causes by restoring legitimate means of dissent and  organizations having political objectives. The former cannot be denied to access to foreign contributions. 


In this article we mention all information about The debate over Foreign Contribution Act Today Current Affairs.

Md Layeeque Azam, Economics Faculty

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