In this blog post, Priyanka Kansara, a law student, from National Law University, Jodhpur writes on, The need for Foreign Contribution and Regulation Act.

Foreign Contribution and Regulation Act

“For the regulation in the acceptance, utilisation and flow 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 for matters connected therewith or incidental thereto.”

The Foreign Contribution (Regulations) Act started with an objective which is, ‘National interest and any other matter connected or incidental to it’. The interpretation of this phrase is based on the Constitutionality of certain other Legal Provisions i.e. Companies Act 2013, the Companies (Corporate Social Responsibility Policy) Rules, 2014. National Interest can be meant for the protection of Economic, Social, and communal, cultural, educational, religious values. ‘Foreign Contribution’ is intended for the donation, delivery or any transfer made by any foreign source of any article, of any currency whether Indian or foreign or of any security.

Economic security

Economic Security is the one of the bases for the enactment of the Foreign Contribution and Regulations Act. The FCRA was originally enacted in 1976, ostensibly meant for address ‘security concern’ related to foreign funding in politics. Under the provision of Unlawful Security and Prevention Act; ‘economic security’ includes financial, monetary and fiscal stability, security of means of production and distribution, food security, livelihood security, energy security, ecological and environment security.

This legal Provision is not only meant for the NGOs but also for the Political Organisations and Political Parties. Moreover, the 2010 Amendment Act has also included electronic media companies and “organisations of a political nature” to the list.

Section 3 of the Act of 2010 puts a restriction on foreign contributions. It says that no foreign contribution shall be accepted by any; candidate for election, journalists, judge, Government servant or employee, a member of any Legislature, political party, an organisation of political nature, association or company involved in audio news or audiovisual news.

Do we need FCRA?

Sometimes, it is vital to analysis the need for such a provision. The FCRA is needed for the accountability, transparency in the financial issues attached to the NGOs and their projects.

The answer to the question as to why we need the FCRA is that the National Interest scheme, the protection of entry of ‘Black Money’ is crucial. This Act is meant to harmonise several schemes under which the NGOs worked for the Protection of Human Rights, Fundamental Rights, Environment and Health on the basis of task orientation and driven by people with common public interest.

The Greenpeace Controversy

In August last year, the Government came with the cancellation of licences of about 40, 000 NGOs operating in the Country for the reason that those NGO’s were working with ‘non-national agenda’.

The issue of necessity of the Foreign Contribution and Regulations Act arises with decision of Ministry of Home Affairs to cancel the registration of Greenpeace India in a relentless onslaught against the community’s right to dissent for adversely impacting the economic security of the Country as it is continuously violating FCRA norms and has “prejudicially affected the economic interest of the State by violating Section 12 (4) (f) (ii).

Section 12(4)(f)(ii) of the Act, states that such a contribution was prejudice to the security, strategic, scientific or economic interest of the State. The contention of the MHA was that Greenpeace India had mixed foreign and domestic funds and had not disclosed the movement of security includes funds property. This issue has raised several questions with regard to the FCRA i.e. whether the Government’s action of targeting few NGOs is fair enough for ‘the developing agenda of the Party in Power? Can NGOs be barred from raising the funds from Foreign Institutions? If yes, then in what circumstances?

The Central Bureau of Investigation made a  Report against 15 NGOs after the emergence of a probe against Mumbai-based social activist Teesta Setalvad’s company Sabrang Communications and Publishing Private Limited (SCPPL) in which, three of its directors were held liable for accepting Rs. 1.8 Cr. from foreign contributors in the USA without registration and prior permission from the home ministry and for posing a threat to the Communal Harmony.

The conflict of National Agenda and Political Agenda

The term ‘National Interest’ has not been defined anywhere in the provision, which impliedly gives the broad discretionary power to the Government to interpret it, but it doesn’t give power to the political parties to use this provision for any of the NGOs, that works against the ‘agenda of the ruling party’.

It is not the ‘Political Agenda’, which matters; it is the National Agenda, which needs FCR Norms. Political agenda is meant for the fulfilment of their Political promises, and on the other hand, ‘National Agenda’ is intended for the fulfilment of the values which are the primary objective of the Constitution of India. Legal measures should be ensured as to what all the criteria of the violation of the FCR Norms are.

Scrutinization of Black Money issue

The primary objective of encouraging Foreign Contribution only after the prior permission of the Central Government is, to minimise the risk of money laundering and financing for unlawful activities i.e. terrorist financing, etc. As per the Ministry of Home Affairs’ Report, a large number of registered NGOs still do not submit their annual statutory returns mandated by the law. It is not the NGOs that use ‘money’ for dubious purposes that should be regulated, but, it is the manner in which Political Parties finance themselves and the lack of financial disclosure by our elected representatives also need close monitoring under the provisions of FCRA which needs to be regulated.

Conclusion

The need of FCRA is felt for the regulation of foreign contribution and foreign hospitality and for the (i) the sovereignty and integrity of India; or (ii) public interest; or (iii) freedom or fairness of election to any Legislature; or (iv) friendly relations with any foreign State; or (v) harmony between religious, racial, social, linguistic or regional groups, castes or communities.

If we look into the cases like Greenpeace; the Delhi High Court had accepted the Writ Petition of Greenpeace by directing the MHA to state a full-proved reason. Such a step denotes the need of Legal Measures to be taken against the actions of the Government, which could be biased against the NGOs and for the regulations of the financial matters of the NGOs.

On the same footing, the Hon’ble High Court in the case of Association for Democratic Reforms & Anr vs. Union of India & Ors (W.P.(C) 131/2013), found that both the BJP and the Congress had received funds in violation of the Foreign Contribution (Regulation) Act (FCRA)”.

Merely a ‘Political Nature’ is a very dangerous, wide and a very vague expression. The Supreme Court has held if a provision is capable of both use and abuse, and then, it is violative of Article 14 of the Constitution. Right from 1958 the Supreme Court in Ramkrishan Dalmia’s case has said that any provision made by the legislation cannot be such that it is both capable of use as well as abuse. The FCRA has both pros and cons, but we need to analyse as to how to interpret the provision so that the ‘National Agenda’ should be maintained.