Amended FCRA Rules relax procedural and compliance rigours on NGOs

The amended rules are a breath of fresh air, and are quite forward-looking and progressive, especially in light of the dire harassment FCRA-registered NGOs have faced in the last few years.


ON July 1, the Union Ministry of Home Affairs ushered in the Foreign Contribution (Regulation) Amendment Rules, 2022 that introduced a bevy of much-desired welcome steps. The new amendments have relaxed procedural and compliance rigours on organizations that were earlier governed by a strict regimen which obliged them to report changes in their major employee structure, influx in donations, and compliance reports on the donations received.

Features of amended FCRA Rules

The most prominent and distinguishing feature of the new set of regulations is that the government has increased the threshold of foreign contribution in the form of donations that persons /organizations can receive from relatives. Amongst other things, the receipt of foreign funds can now be reported within 45 days to the government as against 30 days, and importantly, the rule requiring organizations to divulge and publish the names of foreign donors has been dispensed with; the new rules permit organizations to spend 30 per cent more (that is, 50 per cent) of their total official donations on their administrative expenditure as against 20 per cent; previously an entity under the Foreign Contribution (Regulation) Act, 2010 (‘FCRA’) had to update and furnish their Statements of Accounts and ledgers to the Union Government on a quarterly basis, now the cumbersome exercise of placing audits before the government has been reduced from four times a year to once a year, three months before the culminations of the financial year; shifts in the nature, composition, objectives or number of premier office bearers can now be reported within 45 days as opposed to a fortnight.

The amended rules are a breath of fresh air, and are quite forward-looking and progressive, considering the fact that many NGOs, socially proactive organizations, and entities working for the marginalized sections of society had faced painstaking and dire situations less than three years ago when their credentials were shadowed with an almost paranoid suspicion by the State and its watchdog agencies that were let loose to assail socially conscious and empowering entities with a bloody and blind passion. Their offices were raided, their licenses were scrapped, and agencies surmounted them as though they were hardened criminals or nefarious economic offenders.

More recently, former Amnesty India head, writer, journalist and activist Aakar Patel was detained indefinitely at the Bangalore Airport and stopped from travelling abroad without being given any reason. Eventually, he was allowed to fly by the High Court after undertaking to surrender his passport and not misuse his liberty, and faces impending summons from the Enforcement Directorate.

Recent concerns over misuse of FCRA

Before delving further, it is necessary to know the reason behind the enactment of the FCRA. A previous version of this Act was enacted immediately after the Emergency in 1976 with the first aim to regulate the inflow of foreign income into the country, particularly to desist any activity counterproductive and deleterious to the sovereignty, integrity and perseveration of the national interest of India. Over the years, the Act of 1976 was overhauled, and a new FCRA was brought in its place in 2010.

FCRA prohibits certain classes of people (real and corporeal) such as political parties, TV broadcasters, public officers, judges, companies, and so on, from accepting any foreign donations. It prescribes a limited license to organizations, which needs renewal every five years that if not done spells automatic cancellation for the entity. The Act largely vests powers with the Union Government, and confers enormous powers on the investigative agencies: this power also entails the power of revision and of withdrawing prosecution after ascertaining no wrongdoing.

Between 2011 and 2021, 20,600 FCRA licenses had been cancelled. It is nobody’s case that all of these entities are squeaky clean human rights warriors; many of them may have operated as dummies and shell firms whose job is basically whitewash illegally gained wealth. But in this number, a considerable number of organizations rendering yeoman’s service to the society during riots, providing legal aid services and disseminating correct information to combat fake news, among other things, have been unduly persecuted and now face a hostile prosecution, not for sabotaging the national interest but for being on the wrong side of the ruling dispensation.

Be that as it is, the present amendments do call for a resounding applause for the government that has truly shown regard for human rights by, in a way, supporting the cause of the marginalized sections of society, for whom many of these organizations work tirelessly. Coincidentally, some of the charges on which several NGOs were sought to be interdicted were that their administrative spending was far more than the earlier permissible limit of 20 per cent, and they did not report their books for scrutiny before the Union Government.

Now that rules stand relaxed, although prospectively, the government may consider restoring licenses or suo motu revising the charges alleged on organizations who have had a clean track record otherwise, and have contributed immensely to uproot backwardness and poverty from society.

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