Foreign funds

by Abbas Adil

THE Supreme Court’s verdict upholding the Foreign Contribution (Regulation) Amendment Act, 2020, has cleared the air on a controversial issue that largely affected voluntary organisations receiving foreign funding. The court said the amendment enhanced transparency and accountability regarding acceptance and utilisation of foreign contribution. The verdict assumes significance in view of the fact that many recipients of foreign contribution didn’t utilise the funds for the purpose for which they were registered or granted prior permission under the Foreign Contribution Regulation Act (FCRA), even as the annual inflow of foreign contribution almost doubled between 2010 and 2019.

The strict regime had become essential because of past experience of misutilisation of foreign funds and cancellation of certificates of as many as 19,000 registered NGOs for failing to ensure basic statutory compliance such as submission of annual returns and maintenance of proper accounts. Till December 2021, there were reportedly 22,762 FCRA-registered organisations presumably compliant with the new dispensation.

The petitioners were mainly aggrieved by the amended Section 7 of the Act that prohibited transfer of foreign contribution to any association/person and Section 17, which required a primary FCRA account to be opened exclusively at the SBI Main Branch in New Delhi for receiving any foreign contribution. However, the court said, “The restriction or complete prohibition on transfer to third parties, by no standards deprive acceptance of foreign contribution and utilisation thereof in the manner permitted for definite purposes, such as cultural, economic, educational or social programmes. Such a provision must be understood as being procedure established by law in the interests of the general public and in the interests of sovereignty and integrity of the country, including public order.’

The top court said it was open to a sovereign, democratic nation to completely prohibit acceptance of foreign donations. There can’t be any disagreement with the court’s conclusion that receiving foreign donations isn’t an absolute or even a vested right. Allowing unregulated flow of foreign money can have a material impact on the socio-economic structure and polity of the country.

You may also like

Leave a Comment

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.