• The Lok Sabha has passed the Foreign Contribution (Regulation) Amendment (FCRA) Bill 2020 regarding non-governmental organizations (NGOs).
  • The Act regulates the acceptance and utilization of foreign contribution by individuals, associations and companies.
  • Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.


  • Prohibition to accept foreign contribution: Under the Act, certain persons are prohibited to accept any foreign contribution. These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
  • Transfer of foreign contribution: Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution).
  • Aadhaar for registration: The Bill adds that any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document. In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.
  • FCRA account: Under the Act, a registered person must accept foreign contribution only in a single branch of a scheduled bank specified by them. However, they may open more accounts in other banks for utilization of the contribution.
  • Reduction in use of foreign contribution for administrative purposes: Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received.
  • Further, they must not use more than 50% of the contribution for meeting administrative expenses. The Bill reduces this limit to 20%.
  • Surrender of certificate: The Bill adds a provision allowing the central government to permit a person to surrender their registration certificate. 
  • The government may do so if, post an inquiry, it is satisfied that such person has not contravened any provisions of the Act, and the management of its foreign contribution (and related assets) has been vested in an authority prescribed by the government.
  • Suspension of registration: Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days. The Bill adds that such suspension may be extended up to an additional 180 days. CRITICISM OF THE FCRA BILL, 2020
  • The legislation may be used to target political opponents and religious minorities.
  • Cripples NGO Functioning: Due to the 20% cap, many NGOs will shut shop and many people will become jobless.
  • Double Standards: On one hand the government invites foreign funds, but when such funds come for educational and charitable purposes, it is prevented.
  • Licence-Raj on NGOs: The Bill assumes that all NGOs receiving foreign grants are guilty and thus makes Aadhar of office bearers as mandatory requirement.
  • Open the doors for Bureaucratic Harassment: There is a thin line between enforcing transparency and using rules to allow official interference and harassment in the sector. Much of the present bill crosses that line and introduces a questionable degree of micro-management.


  • Interest Aggregators and Interest Articulators: Non-profit organizations play vital role in mobilizing public attention to societal problems and needs. They are the principal vehicle through which communities can give voice to their concerns.
  • Complements Government Machinery: NGOs implement and monitor the government’s welfare policies, operating at the grassroots level where the official apparatus is often non-existent.
  • Hold Government Accountable: NGOs broaden governments accountability by ensuring government is responsive to citizens at large rather than to narrow sectarian interests.
  • Constructive conflict resolution: In the international arena Track II diplomacy (involving non-governmental bodies) plays a crucial role in creating an environment of trust and confidence.
  • Acts as Safety Valve: NGOs also provide a voice for marginal groups and social movements, offering a safety valve that prevents the country’s millions of local mutinies from becoming uprisings.
  • Enriches Democratic Functioning: NGOs foster pluralism, diversity and freedom. They also perform the role of Capacity Builders – providing education, training and spreading awareness. 


  • It is important for NGOs to achieve and maintain a high degree of transparency in not just their work but also their financials.
  • NGOs need to keep their income and expenditure open to public scrutiny. However, credibility of an NGO cannot be decided against the touchstone of the source of funds, native or foreign. 
  • Also, the government must realise that seamless sharing of ideas and resources across national boundaries is essential to the functioning of a global community, and it should not be discouraged unless there is reason to believe the funds are being used to aid illegal activities. 

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