Post Mortem

FCRA Associations under MHA Scanner

By Nagaland Post | Publish Date: 10/22/2020 1:29:30 PM IST

 Does India need foreign charity while it is among the fastest growing economies in the world and the 5th largest economy? Since India is a member of UN and the Asian Development Bank, it receives interest free loans, technical assistance for economic development to gender equity and welfare. The highest receipts have been from IBRD and US continues to be a major donor for India after Germany and UK. The aid comes in the form of sector allocable funds followed by humanitarian, commodity aid and social sector funding. 

NGOs are working on issues of human rights and for the welfare of the society. They are politically independent and serve for the public interest. Being a non-profit nature of its work, it is financially independence too and delivers local community program and building credibility. After all NGO needs a dedicated team to raise money. Foreign grants received by NGOs are regulated by the FCRA -TheForeign Contribution (Regulation) Act. 

The original status of FCRA, 1976 has been revealed after coming of FCRA 2010that was enacted to regulate the acceptance/utilization of foreign contribution/hospitality by certain individuals/associations/companies and to prohibit any activities detrimental to the national interest. The said Act has come into force on the 1stday of May, 2011 and has been amended twice in 2016 and 2018. There is a need to streamline the provisions of the said Act by strengthening the compliance mechanism, enhancing transparency and accountability in the receipt and utilization?

Registered associations can receive foreign contribution for social, educational, religious, economic and cultural purposes. They should be registered under Societies Registration Act 1860; Indian Trust Act 1882 or Companies Act 1956. Undertaking required for acceptance from foreign funds for not prejudicially affected the sovereignty and integrity of India. It should not disrupt communal harmony from a friendly relation of a foreign state. 

The annual inflow of 16,902 crore (2017-18) pumped in as foreign contribution from donor countriesbut many recipients have not utilizedit for the purpose for which they got registered. Many of them were due for want of ensuring statutory compliances such as submission of annual returns and maintenance of proper accounts. This has led to the Central Government to cancel certificates of registration of more than 19,000 recipient organizations. Also the criminal investigations initiated against dozens of such NGOs which indulged in outright misappropriation/misutilization of foreign contribution.

The new amendment seeks to provide that no foreign contribution shall be accepted by any public servant and prohibit any transfer to any association/person. It reduces the limit for defraying administrative expenses from existing 50 per cent to 20 per cent. It empowers the Central Government to require Aadhaar number as identification document. Now it shall receive foreign contribution only in an account designated as ‘‘FCRA Account’’ at SBI New Delhi (62 banks integrated with FCRA), as the Central Government may specify consequential matters at ease.

The receipt and utilization of FCRA towards rural development, welfare of children/orphans, construction / maintenance of school/college, grant of stipend to deserving children, running hospital are welcome move. But the construction/maintenance of places of worship for a particular community are questionable activities for secular India. The quantum of FCRA funds has been on the persistent rise. The huge expenses on research and administration can take a heavy toll for a good cause.

Ministry of Home Affairs (MHA) received serious adverse inputs from several NGOs. It suspects that many NGOs registered under FCRA are indulging money laundering and allegedly diverted the donation for purposes other than their mandate. There are 49,861 registered associations today but 20674 associations got cancelled and 6759 deemed expired as on today after India’s crackdown on NGOs with a report titled “Estimating Philanthropic Capital in India”. The amendment aimed at strengthening the compliance mechanism and enhancing transparency and accountability. 

There are three million NGOs registered across the country and it’s suspected that bulk of them exist only on paper. Thereby it requires proper physical verification of their offices and bank accounts. They even indulge in activities prejudicial to national interest and security. Action against foreign donors is also required for encouraging anti-development campaigns for economic growth. 21985 Associations filed Annual Returns during 2018-19. The registration has been cancelled for 10,000 NGOs/Associations for not furnishing annual returns (2196 Associations during 2018-19) and even the notices returned undelivered or not responded within the stipulated time period. The government had to crack down on foreign donors. And they have been placed on a watch list and barring them from sending money without MHA’s clearance. 

The large amount of funding through illegal routes or camouflaged could bring serious danger to India’s national security. There is no such thing as free lunch as charity might come with hidden agenda. Interestingly FCRA-NGOs are sitting on a staggering pile of cash as unspent money despite foreign donors continues to pour in big bucks. We failed to understand such humongous amount to certain Indians only and not for the needy and destitute of their own countries. Serious concerns have been expressed about the role of foreign funds for changing religious demography, interference in indigenous religious traditions and practices.

Delhi has received the maximum aid from foreign contributors followed by Tamil Nadu. World Vision Trust, Chennai received the highest foreign aid. At the same time, India has rightly been refusing foreign aid during disasters. Any foreigner interested in philanthropy can help India to the Prime Minister’s National Relief Fund. However, Indian diaspora / overseas citizens of India can contribute as individual capacity from their personal funds for being civilizational and emotional connect with India. 

The monetary value isn’t much but the impact value could be arguably higher. When India’s estimated expenditure goes beyond 30 lakh crore in 2020-21, foreign aid of 20,000 crore is quite negligible. Surprisingly India also ranked 7th among the recipients of overseas development assistance (ODA) after Afghanistan, Ethiopia, Pakistan, Tanzania, Vietnam and Haiti. India does not need contributions from the view of pure economic standpoint. Former India’s President Pranab Mukherjee said once that India did not need UK aid during a visit to the United Kingdom as Finance Minister.

However government servant, employee of corporation, member of any legislature, political party, candidate for elections, related with publisher/newspaper are prohibited to receive any foreign hospitality except some statutory provisions. List of Agencies of United Nations and other international agencies and organization are not covered as foreign source.

Kamal Baruah, 


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