The Foreign Contribution (Regulation) Amendment Bill 2006 was introduced in Rajya Sabha on Monday. This replaces the Foreign Contribution (Regulation) Act 1976. The Bill has implications for all voluntary bodies and other individuals and groups receiving any foreign donation or aid.

The existing Act (FCRA 1976) was enacted during the days of Emergency, and has shades of similar laws governing other sectors, such as FERA enacted at that time. Since reforms initiated in 1991, many of these laws have had a paradigm shift. Instead of the earlier system of prior ‘licences’, the focus has been on a liberalised framework with a negative list. For example, FERA has been replaced with FEMA, which requires reporting rather than prior permission in most cases. The current FCRA 1976 is akin to obtaining a prior licence. The proposed FCRA Bill makes the conditions even more stringent. It also specifies detailed requirements rather than broad guidelines for the functioning of groups receiving foreign contribution.

Under the current law, organisations (including societies and associations) require prior permission before being eligible to accept any contribution from a foreign source. They need to obtain a FCRA certificate from the home ministry, and their accounts are open to inspection. The returns of the FCRA accounts need to be reported to income tax authorities annually. The certificate has perpetual validity unless it is withdrawn by the government. Under the proposed law, the certificate will be valid for only five years, and would have to be renewed six months prior to expiry.

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