NGOs Foreign Funding & Risks

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TOPIC: General Studies 2

• Polity, law, fundamental rights, NGOs
• Judiciary

In News: The Supreme Court has ruled that the Centre cannot deprive NGOs of their right to receive foreign money by declaring them as political organisations, if they use legitimate means of dissent to support public causes. 

The Background:

Section 5 of the Foreign Contribution (Regulation) Act, 2010 gives the Union government “unchecked and unbridled powers” to declare an organisation as being one of political nature and deny it access to funds from sources abroad. 

The Apex Court observed – “It is clear from the provision itself that bandhs, hartals, rasta rokos, etc. are treated as common methods of political action.”  Any organisation that supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalised by being declared an organisation of political nature,” the court observed. 

The court also made it clear that organisations used for channeling foreign funds by political parties cannot escape the rigour of FCRA.

However, the court did not declare the provision under the law unconstitutional but ruled that it will be applicable only to those organisations which are involved in active politics. “We hold that it is only those organisations which have connection with active politics or take part in party politics, that are covered by Rule 3 (vi). To make it clear, such of those organisations which are not involved in active politics or party politics do not fall within the purview of Rule 3 (vi),” the judgement said.

The court also clarified that political parties can’t receive foreign fund using non-political NGOs. The court said, “We make it clear that organisations used for channelling foreign funds by political parties cannot escape the rigour of the Act provided there is concrete material”. The bench added that the “Central Government shall follow the procedure prescribed in the Act and Rules strictly before depriving such organisation the right to receive foreign contributions”.

The Plea

The top court bench was hearing a plea filed by the Indian Social Action Forum (Insaf), a voluntary organisation, challenging the validity of various provisions of the act and rules.

Senior advocate Sanjay Parikh, representing the petitioners contended the act confers “unguided and uncanalised power” to the centre to specify an organisation as an outfit of political nature, though not being a political party, to prevent it from accessing foreign funds. The words “political interests” used in the rule are vague and susceptible to misuse, he said.

The court held that a balance has to be drawn between the object that is sought to be achieved by the legislation and rights of the voluntary organisations to have access to foreign funds.

“The purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds. A prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected,” the apex court added.

Many civil society bodies, including the Indian Social Action Forum, TARSHI Delhi, Ford Foundation, Greenpeace India, Amnesty International India and the Centre for Social Justice, have been fighting against the “abuse of legal procedures” and “the use of the FCRA as a tool of repression.” Even India’s top human rights watchdog, the National Human Rights Commission, had issued a notice to the Home Ministry on the issue in 2018. Still, it cancelled the licences of those engaged in rights-based advocacy work. 

The Home Ministry had time and again justified these actions, saying it had no place for bias but was just focussing on technical violations of the FCRA. Incidentally, the original FCRA came into force in 1976 during the Emergency of the Congress era and prohibited MPs, electoral candidates, political parties, judges and media organisations from accepting foreign contributions. However, the FCRA was amended by the Finance Bill 2016 and those changes made it more severe than its predecessor as it targetted “organisations of a political nature.” The new law also put a 50 per cent cap on the proportion of foreign donations, thereby controlling the way NGOs spent their money and made it mandatory for them to renew their licence every five years. This gave the Government the power to decide whether an NGO could renew its licence or not.

There are significant problems with the half-hearted nature of the judgment. 

Removal of the ‘vagueness’ in the law: Vagueness in the law makes it prone to be misused by the government, and is, therefore, a sufficient ground to strike it down. Time and again, the court allows the government the benefit of the doubt with regards to the possible misuse of power, leaving the citizen without any recourse against the executive’s machinations. When the law is vague (in this case, the Act gave the government the power to frame rules whereby an organisation can be declared to have political objectives — without defining what a ‘political objective’ is), the executive essentially circumvents such parliamentary scrutiny by filling the void. This then has the dual effect of leaving the citizen second guessing what his rights actually are, while constantly living under the shadow of punitive action by the government.

Second, the court completely side-stepped the question of violation of Fundamental Rights (on the ground that the petitioner organisation, not being a ‘citizen’ could not claim Fundamental Rights u/Art. 19). Having said that, both the Constitution as well as international law (the International Covenant on Civil and Political Rights) grant the freedom of assembly and association. However, can you exercise a right without the resources to do so? It was the argument of the petitioners that restriction on funding makes the right to association nugatory. Often, the restrictions were used not only to cut off funding, and thereby sustenance for organisations, but also to mire them in exhausting litigation with the government.

Connecting the Dots:

1. The right to protest, the legitimacy of protests as a democratic tool, as well as the funding of protests have all been subjects of vociferous debate over the last few months. What is the common link to all three? Critically examine.