Themes

Foreign Contributions Regulation Act (FCRA), 2010

In the year 2010, the FCRA bill was passed. Taking the excuse of the 'law and order situation' in the country and the need to control the 'foreign hand', the bill was passed without much space for debate. With the passage of this bill, the future of voluntary action in India was sealed. It gave a big blow to the National Policy on the Voluntary Sector (2007) formulated by the government and the recommendations of the Second Administrative Reforms Commission (2008). The passing of the FCRA 2010 also indicates a change in the intention of the government – from reforming and enabling the voluntary sector to controlling and commanding it.

Once the bill became an Act, VANI adopted a two-fold strategy - first, to inform all FCRA certificate-holding organisations about the change and, second, advocating with the Ministry of Home Affairs for better rules. Rules can't supersede the Act, but at least rules can make the provisions of the Act clearer to avoid misinterpretation. VANI provided information through workshops, meetings, newsletters, e-mails, etc, encouraging all organisations to follow the new instructions and keep their records in order. Under its second strategy VANI organised consultations with technical experts, finance officials and chartered accountants to get feedback on the practical side of FCRA. Similar consultations were organised with heads of various voluntary organisations. In one such consultation, senior officers from the ministry were invited. VANI provided a petition and many of the demands were accepted by the ministry. VANI also appealed to its members and non-members to write in with their concerns to the ministry. The final rules became applicable from 1 May 2011. During the framing of the rules, VANI started formal and informal advocacy. The new FCRA rules acknowledged some of the recommendations submitted by VANI.

One of the most contested areas in which VANI along with its partners have been arguing with the government was renewal of FCRA registration after every 5 years. Acting along these lines, VANI demanded online submissions of renewal applications, mandatory annual submissions and applications for new registration. Online acknowledgement of applications and tracking will be introduced. No doubt submission of hardcopies will be necessary, but the online facility will provide accountability from the department. VANI also received complaints from many organisations that the FCRA department demands 20-year old documents during investigations. To put a specific cap on this, VANI suggested aligning this requirement as per the Income Tax Act. With this change, the FCRA department can check and investigate documents of up to five years. Ambiguity remained in the rules about transferring foreign currency from FCRA certificate-holding organisations to other FCRA-registered organisations. VANI demanded and received written clarification from the FCRA department on this issue. Now, foreign currency can be transferred to another FCRA-holding organisation, unless the receiving organisation has been black-listed or found a defaulter by the law.

The Act stated that administrative expenses should not be more than 50 per cent of the total expenses. There was ambiguity in understanding this provision. VANI suggested that administrative expenses be defined. This was subsequently accepted by the department.

Many organisations expressed their concern about the impact of FCRA registration renewal on long term projects if it comes up for approval in the fifth year. No donor will sign a project if the organisation's FCRA is going to come up for renewal. To accommodate this concern, a provision allowing for renewal in the fourth year, i.e., one year prior to the due year, has been allowed.

Another contested area is the grounds for rejection. Any organisation which has a political objective in its by-laws or is found in practice to have a political objective can be denied FCRA registration. The second clause relating to habitual indulgence in dharna, rail roko and jail bharo could also lead to being denied FCRA registration. This aspect has high potential for misuse. The new FCRA rules have very clear clauses for appeal.