After being pulled up by the Delhi High Court for not initiating any action against the Congress and the BharatiyaJanata Party, which received foreign funds from two subsidiaries of Vedanta, a U.K.-based company, the Home Ministry will seek the Attorney-General’s opinion to amend the repealed Foreign Contribution Regulation Act (FCRA) 1976, which barred foreign donations to political parties.




The origins of the FCRA:

The original Foreign Contribution (Regulation) Act was enacted in 1976 by the Indira Gandhi-led government during the Emergency. It prohibits electoral candidates, political parties, judges, MPs and even cartoonists from accepting foreign contributions. As the inclusion of ‘cartoonists’ under its ambit suggests, the intent was to clamp down on political dissent.


Rationale behind the act

The ostensible justification given for the law was to curb foreign interference in domestic politics. The FCRA was aimed at preventing political parties from accepting contributions from foreign sources.


Foreign funding permitted in economy after 1991

It embraced foreign funding by opening up the economy in 1991.With the state wooing foreign investment, Indian businesses, too, helped themselves to foreign funds. And so did our political parties, despite the FCRA, 1976, expressly prohibiting them from accepting money from ‘foreign sources’.


Political Parties amending FCRA to suit their convenience:

Both the BharatiyaJanata Party (BJP) and the Congress were pulled up by the Delhi High Court in 2014 for violating the FCRA by accepting contributions from the Indian subsidiaries of the London-based multinational, Vedanta.


It ordered the government and the Election Commission to take action against both the parties. To no one’s surprise, the BJP-led NDA government did not take action against the BJP. Nor did it do so against the Congress, which, as the leading Opposition party, did not think it appropriate to protest this flagrant flouting of a judicial directive.


Instead, earlier this year, the government quietly introduced a clause in the Finance Bill that amended the relevant section of the FCRA, 2010, so that what was hitherto a “foreign company” now became an Indian company. This amendment was introduced with retrospective effect — a brazen attempt to legitimise the FCRA violations of the two parties. This amendment has also opened the doors for all political parties to accept funding from foreign companies, so long as it is channelled through an Indian subsidiary.


FCRA, 2010

It may be pertinent to point out here that it was the Congress, under the stewardship of Manmohan Singh that replaced the original FCRA, 1976, with a more draconian version in 2010. But why the new law? To answer that question, we need to consider the differences between the two legislations.


The new FCRA/ Major changes between the old and the new version of FCRA:

Human rights activist draws attention to three changes that render the new Act more stringent than the old one.


  1. Firstly, FCRA registration under the earlier law was permanent, but under the new one, it expired after five years, and had to be renewed afresh. This instantly hands the state a whip with which to bring errant organisations to heel.


One may recall that earlier this year, 11,319 NGOs lost their FCRAlicences without the government having to either examine their records or suspend their registrations individually — their licences simply expired as the deadline for renewal passed.


  1. Second, the new law put a restriction (50 per cent) on the proportion of foreign funds that could be used for administrative expenses, thereby allowing the government to control how a civil society organisation (CSO) spends its money.


  1. The third and most important distinction is that while the 1976 law was primarily aimed at political parties, the new law set the stage for shifting the focus to “organisations of a political nature”. The FCRA Rules, 2011, framed by the United Progressive Alliance government, has served the NDA well as a manual on how to target inconvenient NGOs, especially those working on governance accountability.


Double standards of FCRAfavouring Political Parties and Businesses

Put simply, a political class that has no qualms taking money from foreign sources, that amended the FCRA to let itself off the hook for past violations, that opened the doors for all political parties to accept foreign funding, that paved the way for Indian businesses to access foreign capital, is now anxious to prevent CSOs from accessing foreign funds because some of them question its policies in a democratic battle to protect constitutional rights and entitlements.


(Adapted from The Hindu& The Indian Express)