Mention the key objective of the foreign contribution Regulation Act (FCRA). The recent amendments in the Act have faced criticism from various sections. Analyse.

The Foreign Contribution Regulation Act (FCRA) seeks to regulate the flow of foreign exchange flowing into the non-government organisations and other entities.

Key objectives behind the act:

  • Helps in checking money laundering.
  • Check on undue foreign influence on NGOs.
  • Fostering accountability, as only 10% of 29 lakh+ NGOs files returns.
  • Bringing-in transparency in the administration of the NGOs.
  • Check threat from terrorism by curbing flow of black money.

Recent amendments that have met with criticism:

  • Compulsorily opening of a dedicated account in SBI branch in New Delhi.
  • Restrictions on civil servants and others to receive funds under these accounts.
  • The pronouncements directing/limiting amounts of appropriations to be done as administrative expenses.
  • Limitation on transferring the funds to other organisations from these accounts.
  • Need for frequent reporting and licence renewal for the operation.

Due to these provisions, the act is now being seen as detrimental towards NGOs which bank upon the donations.

Way Ahead:

The covid-19 crisis has shown importance of the NGO sector in the delivery of last mile services. The regulation of foreign funds should balance the need for national sovereignty with public welfare.

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