Do we Need Regulation of Foreign Contribution?

Once upon a time we feared foreign funding. Shri Khurshed Alam Khan in his speech in Rajya Sabha [March 9, 1976] summarized the circumstances that necessitated the regulation of foreign contributions in India. He said, quote,

“Sir, there was a time when territorial domination and spheres of influence of the imperialist powers and big powers were the order of the day. But now money seems to be the best way of interference in the domestic affairs of the country. But it is now a well-known and universally accepted fact that neo- colonialism is a clever substitute for the old type of crude colonialism. This is usually backed by the generous foreign contributions in various shapes, foreign hospitality. The foreign exchange deficits and requirements of developing countries and poor countries that particularly do not have oil resources these days have added to the dimension of this problem. Even our trade unions are not spared by the people who are interested in financing their activities in other countries…”

In view of this Foreign Contribution Regulation Act, 1976 was enacted with the objective of o regulating the acceptance and utilisation of foreign contribution or foreign hospitality by certain persons or associations; with a view to ensuring that parliamentary institutions, political associations and academic and other voluntary organisations as well as individuals working in the important areas of national life may function in a manner consistent with the values of a sovereign democratic republic. Thus, primarily, the effort was to regulate foreign contribution going to political activities and certain other state functionaries.

The policy continued when 2010 Act was enacted. The broad feature of the Act was creation of a framework for regulating and controlling acceptance and utilization of foreign contribution by candidates for elections, political parties, government servants, journalists etc. Section 5(1) of the Act confers power on the Centre to declare an organisation to be an organisation of a “political nature”. Once an organization is declared as an organization of political nature, it cannot accept any foreign contribution.

After the Delhi High Court judgment, in which it was found that political parties in India received foreign funding on many occasions, foreign funds received by political parties after September 26, 2010 were validated. Further, in the 2018 Finance Act, the government introduced another amendment to cover “the period beginning August 5, 1976—the date the original FCRA law came into being”, thereby stopping scrutiny of any foreign funding to political parties. Further, Section 29B of the Representation of People Act “prohibits all political parties registered with Election Commission to accept any contribution from a foreign source”.

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Notwithstanding the controversial retrospective amendments in law, FCRA still provides that no political party or an organization of political nature can receive any foreign contribution. Further, it prohibits government servants, journalists etc. to receive any foreign contribution or hospitality. There cannot be any opposition to this goal of the Act. Political process in India ought to be sheltered from the influence of foreign funds.

However, there are lakhs of other NGOs are working in India. Ever since independence, the NGOs have played a vital role in India in reaching out to the marginalised communities and far off areas in India in multiple ways. Each time a crisis has hit India, be it a health crisis, an economic crisis or even a natural disaster, the NGOs have been on the forefront of relief efforts. In fact, during the ongoing COVID-19 pandemic, the relief work done by the NGOs was lauded by none other than the Prime Minister of India, Narendra Modi.

Many of the reputed NGOs are closing their offices in India. Last year Greenpeace closed some of its offices in India. A couple of days back Amnesty International closed its India operation alleging witch-hunt. None of these organizations have been declared an organization of political nature and hence they should not have any problem in receiving foreign funds, but they must be facing certain problems due to which they closed down.

Should government be bothered about foreign contribution? Is government bothered about domestic contributions received by various non-profit organizations in India?

Meaning of the term “business” has been expanded to cover almost all activities, including that of an NGO. A contribution received by an organization, including an NGO is treated as an “income” of the organization and taxed as such except for a few superficial exemptions. NGOs are required to follow other laws just like any other business organizations. So, why is the government bothered about the contributions received by NGOs and uses of such contributions as long as it is not interfering in the political process?

For a democracy to work properly, it’s not enough to simply elect representatives every five years. The public needs to express themselves on day to day basis to make sure that governments don’t abuse their powers. It’s not enough for the laws and rules to exist on paper only. NGOs explain to the public what’s going on in current affairs so that they can take well-informed decisions. NGOs give the public channels through which they can speak to government, by representing the views of the public, or by allowing the public to join a public protest or sign a petition. NGOs monitor how the government uses its powers and often take governments to court if they break the law. NGOs, just like a free press media are key to ensuring that public power and resources are used in the public interest.

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Unfortunately, governments all over the world, are making it more difficult for NGOs working on certain issues to carry out their work. Governments tend to target NGOs working on environmental protection, anti-corruption, equality for women, LGBTI persons, migrants and ethnic minorities, civil liberties, democracy and the rule of law.

Coming back to the foreign contribution issue- Governments have problem with NGOs when the work in the area of public policy, advocacy of certain rights and spreading their views to the general public; which may not confirm to the views of governments. However, these works are also legitimate business activities, which can be done by any business organization for any foreign entity. Advertisement is a bonafide business and so is public relation activity. Can a business organization to stopped from doing public relation activity even for a foreign entity? Universal declaration of human rights guarantees freedom of expression. Article 10 of the declaration provides that everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

Democratic governments all over the world are facing problems on various fronts, the primary being lack of economic growth. Lack of economic growth is fuelling discontents and the governments are being criticized acerbically. Taxes have been increased to an unsustainable level all over the world. Ron Paul, US Congressman once said, “the founding fathers never intended a nation where citizens would pay nearly half of everything they earn to the government”.

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Democratic societies triumphed over monarchy or feudal societies because democratic institutions were better than feudal ones. It gave freedom to its people. Democracy cannot be saved without saving the democratic institutions, the democratic way of thinking and democratic way of protecting dissent. Too much interference by governments, including interference by democratic governments are not good for democracy or democratic institutions. It increases the cost of government resulting in unsustainable taxation. It also results in corruption, red-tapism and other ills of governments.

The quantum of foreign contribution received in India has hovered around 15K crores a year. It is a peanut in the scale of Indian economy. Though data is not available readily, one can find that even governments in India contribute many times of this amount to NGOs in India. Many of the government programmes are run on NGO model. Governments itself has created hundreds of NGOs like organizations. In these circumstances, too much attention on a few NGOs brings a bad name to the nation and society.

Democracy is tested not in the way supporters of governments is treated, it is tested in the way opposition is treated. Opposition is the heart and soul of democracy. Freedom of expression essentially means freedom to oppose governments policies and programs; nobody needs any freedom to support governments. Governments will do itself a favour by interfering less everywhere, particularly in the working of NGOs.

Author Of The Article Is Rajesh Kumar from Rajesh Kumar & Associates
Author is an advocate. Views expressed are personal.
601, Alpha Corporate Tower-II,
Sector-9, Vasundhara,
Ghaziabad, U.P. – 201012

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