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GS Paper: Governance, Transparency & Accountability, Citizens Charters

  • [pib] Centre declares Soya Meal as an Essential Commodity

    In a bid to cool down the domestic prices of Soya Meal, Government has notified order under the Essential Commodities Act to declare ‘Soya Meal’ as Essential Commodities under the Essential Commodities Act, 1955.

    Essential Commodities Act

    • The ECA, 1955 was established to ensure the delivery of certain commodities or products, the supply of which, if obstructed due to hoarding or black marketing, would affect the normal life of the people.
    • The list of items under the Act includes drugs, fertilizers, pulses, and edible oils, as well as petroleum and petroleum products.
    • The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
    • Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.

    How ECA works?

    (1) Centre notifying stock limit holding

    • If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
    • The States act on this notification to specify limits and take steps to ensure that these are adhered to.
    • Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.

    (2) States can opt-out

    • A State can, however, choose not to impose any restrictions.
    • But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.

    What happens for non-compliance?

    • As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
    • The excess stocks are auctioned or sold through fair price shops.
    • This improves supplies and brings down prices.

    Ex: The Union Government has brought masks and hand-sanitizers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality. Later this move was reverted.

    What about Food Items?

    (1) Items covered:

    Rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.

    (2) Price Stabilization Fund (PSF):

    The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.

    Recent amendments to the ECA

    In 2020, the EC Act was amended for the stock limit to be imposed only under exceptional circumstances such as famine or other calamities.

    • Exceptional circumstances: It allowed the centre to delist certain commodities as essential, allowing the government to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities.
    • Commodities de-regulated: The commodities that have been deregulated are food items, including cereals, pulses, potatoes, onion, edible oilseeds, and oils.

    Exceptions provided:

    • The government regulation of stocks will be based on rising prices, and can only be imposed if there is
    1. A 100% increase in retail price in the case of horticultural produce and
    2. A 50% increase in retail price in the case of non-perishable agricultural food items
    • These restrictions will not apply to stocks of food held for public distribution in India.

     

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  • Election Commission

    The “informal interaction” of the CEC and two other Election Commissioners with the Prime Minister’s Principal Secretary has raised questions about the neutrality of the Commission, especially when elections to crucial States are around the corner.

    About Election Commission of India

    • The ECI is a constitutional authority whose responsibilities and powers are prescribed in the Constitution of India under Article 324.
    • In the performance of its functions, the Election Commission is insulated from executive interference.
    • It is the Commission that decides the election schedules for the conduct of elections, whether general elections or by-elections.
    • ECI decides on the location of polling stations, assignment of voters to the polling stations, location of counting centers, arrangements to be made in and around polling stations and counting centres and all allied matters.

    Litigations against EC

    • The decisions of the Commission can be challenged in the High Court and the Supreme Court of India by appropriate petitions.
    • By long-standing convention and several judicial pronouncements, once the actual process of elections has started, the judiciary does not intervene in the actual conduct of the polls.

    Issues with PMO meeting

    • Executive interference: ECs are expected to maintain distance from the executive — a constitutional safeguard to insulate the commission from external pressure and allow it to continue as an independent authority.
    • Violating official channels: The EC’s communication with the Government on election matters is through the bureaucracy — either with its administrative ministry — the Law Ministry or the Home Ministry.
    • Breach of protocol: The Law Ministry spells the fine print on law for the country and is expected not to breach the constitutional safeguard provided to the commission to ensure its autonomy.

    Recent incidence of criticisms

    Ans. Partiality in Elections

    • Over the last couple of years, several actions and omissions of the commission have come in for criticism.
    • Nearly 66 former bureaucrats in a letter addressed to the President, expressed their concern over the working of the Election Commission.
    • They felt was suffering from a credibility crisis, citing various violations of the model code of conduct during the 2019 Lok Sabha Elections.

    Importance of ECI for India

    • Conduction of Election: The ECI has been successfully conducting national as well as state elections since 1952.
    • Electoral participation: In recent years, however, the Commission has started to play a more active role to ensure greater participation of people.
    • Discipline of political parties: It had gone to the extent of disciplining the political parties with a threat of derecognizing if the parties failed in maintaining inner-party democracy.
    • Upholds federalism: It upholds the values enshrined in the Constitution viz, equality,
      equity, impartiality, independence; and rule of law in superintendence, direction, and control over electoral governance.
    • Free and fair elections: It conducts elections with the highest standard of credibility, freeness, fairness, transparency, integrity, accountability, autonomy and professionalism.

    Issues with ECI

    • Flaws in the composition: The Constitution doesn’t prescribe qualifications for members of the EC. They are not debarred from future appointments after retiring or resigning.
    • No security of tenure: Election commissioners aren’t constitutionally protected with security of tenure.
    • Partisan role: The EC has come under the scanner like never before, with increasing incidents of breach of the Model Code of Conduct in the 2019 general elections.
    • Political favor: The opposition alleged that the ECI was favoring the ruling party by giving clean chit to the model code of conduct violations made by the PM.
    • Non-competence: Increased violence and electoral malpractices under influence of money have resulted in political criminalization, which ECI is unable to arrest.

     

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  • How India’s data protection Bill compares with EU regulation

    The Personal Data Protection Bill is in some aspects very similar with some differences to global standards such as European Union’s General Data Protection Regulation. Here is how:

    Must read:

    Draft Personal Data Protection Bill, 2021

    Major similarities

    [1] Consent

    • EU: Users must have informed consent about the way their data is processed so that they can opt in or out.
    • India: Processing of data should be done in a fair and transparent manner, while also ensuring privacy

    [2] Breach

    • EU: Supervisory authority must be notified of a breach within 72 hours of the leak so that users can take steps to protect information
    • India: Data Protection Authority must be informed within 72 hours; DPA will decide whether users need to be informed and steps to be taken

    [3] Transition period

    • EU: Two-year transition period for provisions of GDPR to be put in place
    • India: 24 months overall; 9 months for registration of data fiduciaries, 6 months for DPA to start

    [4] Data fiduciary

    • EU: Data fiduciary is any natural or legal person, public authority, agency or body that determines purpose and means of data processing
    • India: Similar suggestions; additionally, NGOs which also process data to be included as fiduciaries

    Differences:

    [1] Anonymous information

    • EU: Principles of data protection do not apply to anonymous information since it is impossible to tell one from another
    • India: Non-personal data must come under the ambit of data protection law such as non-personal data

    [2] Punishment

    • EU: No jail terms. Fines up to 20 million euros, or in the case of an undertaking, up to 4 % of their total global turnover of the preceding fiscal year
    • India: Jail term of up to 3 years, fine of Rs 2 lakh or both if de-identified data is re-identified by any person.

     

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  • AFSPA and the challenges ahead

    Context

    The death of civilians in Nagaland in a security operation has revived the debate about AFSPA.

    Demand for repeal of AFSPA

    • Some years ago, all the northeastern states had come together to demand the annulment of this Act.
    • That remained in the realm of yet another “demand”.
    • In 1997, after Nagaland’s most enduring insurgent outfit, the National Socialist Council of Nagalim (NSCN), led by Isak Swu and T H Muivah, first decided to talk peace with the Indian government, the Naga Peoples’ Movement for Human Rights (NPMHR) had approached the Supreme Court for revocation of the Act.
    • Enabling legislation: The apex court had then upheld its constitutionality and said it was an enabling legislation that confers minimum powers on the army to operate in situations of widespread internal disorder.

    Way forward

    • Talk to the other groups: Many are wondering if the peace talks between the NSCN (IM) and the government of India now lie in tatters.
    • The media has focussed exclusively on the NSCN (IM) and ignored the other Naga National Political Groups (NNPGs), who have been brought on board because they are Nagaland-based and speak exclusively for Nagaland.
    • The NNPGs and the Gaon Bura Association of Nagaland doubt NSCN(IM)’s ability to bring lasting peace in Nagaland.
    • Since 2015, the Nagaland Gaon Bura Association, the apex body of Nagas which includes all the 16 recognised tribes and the NNPGs barring the NSCN (IM), have sent several memorandums to the government.
    • These representatives of the Naga people do not demand a separate flag or constitution because they understand these are tenuous demands.
    • These groups have also never raised the sovereignty issue.
    • The working committee of the seven NNPGs, roped in to join the peace talks, are also opposed to the idea of changing interlocutors as and when the NSCN (IM) decides.
    • Reconsider use of AFSPA: There is a need to reconsider the use of the army and AFSPA when killings have reduced considerably.
    • The apex body has specifically mentioned that they want to be delivered from the gun culture.
    • Check the misuse of FMR: Countering insurgency in the Northeast is fraught also because of the Free Movement Regime (FMR) between India and Myanmar.

    Conclusion

    The government need to reconsider the use of AFSPA and also focus on other measures to ensure peace and stability in these regions.

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  • Repealing AFSPA will strengthen Constitution

    Context

    The killing of 14 civilians in Nagaland in a security operation has sparked debate over the Armed Forces Special Powers Act (AFSPA).

    Case for repeal of AFSPA

    • The repeal of AFSPA is necessary not just for restoring constitutional sanity, but also as a way of acknowledging dark history of our conduct in Nagaland.
    • If the moral case for repealing AFSPA is strong, the political case points in the same direction as well.
    • Need for ensuring individual dignity: The political incorporation of Nagaland (and all other areas where this law applies) will be set back if the guarantees of individual dignity of the Indian Constitution are not extended.
    • Not state of exception: We often describe AFSPA in terms of a “state of exception”.
    • But this theoretical term is misleading. How can a law that has been in virtually continuous existence since 1958 be described as an “exception”.

    Why AFSPA is counterproductive to Army

    • Distortion of choice: First, giving wide immunity to the forces can distort the choice of strategy in counter insurgency operations.
    • Reduce professionalism: Second, wider immunity can often reduce rather than increase the professionalism of the forces.
    • Against federalism: Third, we are constantly in the vicious circle that leads to central dominance in a way that undermines both Indian federalism and operational efficiency.

    Powers and limits under AFSPA

    • The Act grants extraordinarily sweeping powers to the armed forces of search, seizure, arrest, the right to shoot to kill.
    • No blanket immunity: It is true that AFSPA does not grant blanket immunity.
    • The SC guidelines: The Supreme Court laid down guidelines for the use of AFSPA in 1997; and in principle, unprofessional conduct, crimes and atrocities can still be prosecuted.
    • But this will run into two difficulties.
    • Lack of accountability mechanism: As the Jeevan Reddy Committee that advocated the repeal of AFSPA pointed out, the accountability mechanisms internal to AFSPA have not worked.
    • In 2017, the Supreme Court ordered a probe into 1,528 extra-judicial killings in Manipur.
    • At the least, this order seemed to suggest the problems with AFSPA were systemic.
    • But there have apparently been no hearings in this case for three years.
    • Lack of human empathy: At the heart of AFSPA is a profound mutilation of human empathy.
    • Our discourse is a rather abstract one, balancing concepts of human rights and national security.

    Conclusion

    It is high time that all parties come together to repeal AFSPA. It will also be in the fitness of things if all parties got together to acknowledge the trauma in Nagaland and elsewhere. This will strengthen, not weaken, the comatose Indian constitutional project.

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  • Need for closer scrutiny of reduced out-of-pocket expenditure on health

    Context

    The National Health Accounts (NHA) report for 2017-18 is being celebrated widely as it shows that total public spending on health as a percentage of GDP has increased to a historic high of 1.35% of GDP.

    India’s total public spending on health

    • One of the lowest in the world: India’s total public spending on health as a percentage of GDP or in per capita terms has been one of the lowest in the world.
    • Majority spent by the States: The Union government traditionally spends around a third of the total government spending whereas the majority is borne by the States.
    • There has been a policy consensus for more than a decade now that public spending has to increase to at least 2.5% of GDP.
    • However, there has not been any significant increase so far.
    • Despite several pronouncements, it has continued to hover around 1%-1.2% of GDP.

    Why NHA report is being celebrated?

    • The National Health Accounts (NHA) report capture spending on health by various sources, and track the schemes through which these funds are channelised to various providers in a given time period for a given geography.
    • The National Health Accounts (NHA) report for 2017-18 is being celebrated widely as it shows that total public spending on health as a percentage of GDP has increased to a historic high of 1.35% of GDP.
    • The increase shown in NHA 2017-18 is largely due to increase in Union government expenditure.
    • Increase in Centre’s share: For 2017-18, the Centre’s share in total public spending on health has jumped to 40.8%.
    • However, if we study the spending pattern of the Ministry of Health and Family Welfare and the Ministry of AYUSH, we see that expenditure increased to 0.32% of GDP from 0.27% in 2016-17 — insufficient to explain the overall jump.

    Issues with NHA report

    • Expenditure of DMS included: Much of this increase has actually happened on account of a tripling of expenditure of the Defence Medical Services (DMS).
    • Compared to an expenditure of ₹10,485 in 2016-17, it increased to ₹32,118 crore.
    • Though the increasing spending for the health of defence personnel is a good thing, such spending does not benefit the general population. 
    •  Within government expenditure, the share of current health expenditure has come down to 71.9% compared to 77.9% a year ago.
    • Capital expenditure included: This essentially means, capital expenditure has increased, and specifically in defence.
    • There is a problem in accounting capital expenditure within the NHA framework.
    • Why capital expenditure needs to be left out: Equipment brought or a hospital that is built serves people for many years, so the expenditure incurred is used for the lifetime of the capital created and use does not get limited to that particular year in which expenditure is incurred.
    • The World Health Organization proposes to leave out capital expenditure from health accounts estimates, instead focus on current health expenditure.
    • Incomparable to other countries: In NHA estimates in India, in order to show higher public investment, capital expenditure is included; thus, Indian estimates become incomparable to other countries.
    • The NHA estimate also shows that out-of-pocket expenditure as a share of GDP has reduced to less than half of the total health expenditure.
    • NSSO 2017-18 data suggest that during this time period, utilisation of hospitalisation care has declined compared to 2014 NSSO estimates for almost all States and for various sections of society.
    • Sign of distress: The decline in out-of-pocket expenditure is essentially due to a decline in utilisation of care rather than greater financial protection.
    • Actually, the NSSO survey happened just after six months of demonetisation and almost at the same time when the Goods and Services Tax was introduced.
    • The disastrous consequences of the dual blow of demonetisation and GST on the purchasing power of people are quite well documented.
    • Another plausible explanation is linked to limitations in NSSO estimates. The NSSO fails to capture the spending pattern of the richest 5% of the population (who incur a large part of the health expenditure).
    • Thus, out-of-pocket expenditure measured from the NSSO could be an under-estimate as it fails to take into account the expenditure of the richest sections.

    Conclusion

    The reduction of out-of-pocket expenditure is a sign of distress and a result of methodological limitations of the NSSO, rather than a sign of increased financial protection.

     

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  • Why India will be scrutinised at Summit for Democracy

    Context

    On December 9 and 10, US President Joe Biden will host a virtual “summit for democracy”, which will bring together leaders of 100 countries, civil society and private sector representatives.

    Challenges to India’s democratic image

    • India categorised as partly free: The US-based Freedom House’s “Freedoms of the World” index categorises India as only “partly free”; the Swedish V-Dem calls India an “electoral autocracy”.
    • Others lump India with Hungary, Turkey and the Philippines, where authoritarian leaders rule the roost.
    • Factors affecting India’s image: Rights violations in Kashmir, suspension of internet services in Kashmir, the conflation of political dissent with the colonial-era crime of sedition, the use of anti-terrorism laws to silence critics, the failure of the state to ensure freedoms guaranteed by the Constitution, the anti-Muslim amendments to citizenship laws have all but shredded India’s democratic image.

    Agenda of the summit

    • The agenda of the summit holds contemporary resonance in India.
    • Three broad themes: According to the State Department, the summit will convene around three broad themes — defending democracy against authoritarianism, addressing and fighting corruption, and promoting respect for human rights.
    • Leaders will be “encouraged” to announce “specific actions and commitments” to meaningful domestic reforms and international initiatives that advance the summit’s goals.

    Why India’s contribution to the agenda will be scrutinized closely

    • Cultural relativisms: One theme that emerges from these observations is that of cultural relativism — the “Indianness of India’s democracy”— “as India becomes ever more democratic, democracy will become ever more Indian in its sensibilities and texture”.
    • Role of civil society: A second theme is the role of civil society.
    • It has been accused of “defaming” or bringing harm to India, as espoused most recently in statements by the National Security Adviser, who also called them “the new frontier of a fourth-generation war”.
    • Ensuring democratic rights: Another noticeable theme is around the responsibility for ensuring democratic rights.

    Challenges for India

    • India has to reconcile the paradox inherent in submitting to international gaze at a global assembly where it is apparently required to make commitments adhering to “western” standards of democracy while claiming there is an Indian model.
    • In March this year, External Affairs Minister Jaishankar dismissed global standards and international metrics of democracy as rubbish.
    • For perspective, this is what China says too.
    • When President Biden brought up Beijing’s human rights record, President Xi Jinping told him there was no “uniform model” of democracy, and that dismissing other “forms of democracy different from one’s own is itself undemocratic.
    • The summit may intensify these differences, particularly because the host has no shining credentials either.
    •  If democracy-building was never the US goal in Afghanistan, as Biden declared, why make the unfreezing of Afghan assets overseas conditional to the Taliban turning democratic and inclusive overnight?

    Conclusion

    India’s expected participation in the summit will come against a rather bleak backdrop of relativism, misinformation, confusion, obfuscation and polarisation on issues of democracy, civil society and rights.

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  • More a private sector primer than health-care pathway

    Context

    NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.

    About missing middle and provision in the NITI Aayog report

    • The Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), aims to extend hospitalisation cover of up to ₹5 lakh per family per annum to a poor and vulnerable population of nearly 50 crore people.
    • Left out segment: Covering the left out segment of the population, commonly termed the ‘missing middle’ sandwiched between the poor and the affluent, has been discussed by the Government recently.
    • Towards this, NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.
    • Primary role for private commercial health insurer: The report proposes voluntary, contributory health insurance dispensed mainly by private commercial health insurers as the prime instrument for extending health insurance to the ‘missing middle’.

    Issues with the provision in the NITI Aayog report

    • Narrow coverage: Government subsidies, if any at all, will be reserved for the very poor within the ‘missing middle’ and only at a later stage of development of voluntary contributory insurance.
    • This is a major swerve from the vision espoused by the high-level expert group on UHC a decade ago, which was sceptical about such a health insurance model.
    • No country has ever achieved UHC by relying predominantly on private sources of financing health care.
    • Contributory insurance not best way: Evidence shows that in developing countries such as India, with a gargantuan informal sector, contributory health insurance is not the best way forward and can be replete with problems.
    • Issues with low premium model: For hospitalisation insurance, the report proposes a model similar to the Arogya Sanjeevani scheme, albeit with lower projected premiums of around ₹4,000-₹6,000 per family per annum.
    • This model is a little different from commercial private insurance, except for somewhat lower premiums.
    • Low premiums are achieved by reducing administrative costs of insurers through an array of measures, including private use of government infrastructure.
    • This model is vulnerable to nearly every vice that characterises conventional private insurance.
    • Insufficient measures to deal with adverse selection: The report suggests enrolment in groups as a means to counter adverse selection.
    • The prevailing per capita expenditure on hospital care is used to reflect affordability of hospital insurance, and thereby, a possible willingness to pay for insurance.
    • Both these notions are likely to be far-fetched in practice, and the model is likely to be characterised by widespread adverse selection notwithstanding.
    • OPD insurance on a subscription basis: The report proposes an OPD insurance with an insured sum of ₹5,000 per family per annum, and again uses average per capita OPD spending to justify the ability to pay.
    • However, the OPD insurance is envisaged on a subscription basis, which means that insured families would need to pay nearly the entire insured sum in advance to obtain the benefits.
    • Clearly, this route is unlikely to result in any significant reduction of out-of-pocket expenditure on OPD care.
    • Role of government:The NITI report defies the universally accepted logic that UHC invariably entails a strong and overarching role for the Government in health care, particularly in developing countries.

    Consider the question “What are the challenges in achieving universal health coverage? What are the issues with private sources  financing health care to achieve UHC?”

    Conclusion

    The National Health Policy 2017 envisaged increasing public health spending to 2.5% of GDP by 2025. Let us not contradict ourselves so early and at this crucial juncture of an unprecedented pandemic.

  • Issues with ordinance that extend the tenure of the Director of the CBI

    Context

    The Central government’s decision to give a five-year tenure to heads of the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) has drawn a lot of flak.

    Background

    • Apex court’s directive giving a mandatory two-year tenure to the Director of the CBI was a fallout of the Hawala scandal.
    • Prior to that, the government was arbitrary and capricious in choosing the Director.
    • It was not rare to see temporary appointments given to favour some individuals.
    • Seniority was often ignored in appointments and Directors were removed frequently.

    Why tenure matters

    • Short tenure: A two-year tenure for a CBI head is too short for any officer to make an impact on the organisation.
    • Longer provides the much-needed continuity that a Director needs in an outfit charged with the task of conducting highly sensitive investigations, which sometimes impinge on the longevity and stability of a democratically elected government.
    • The Federal Bureau of Investigation chief in the U.S. gets a 10-year term.

    Suggestions

    • Need to avoid government interference: Any blatantly dishonest interference in the working of the organisation is bound to raise the hackles of those who believe in and carry out straightforward investigations.
    • The government will therefore have to show enormous restraint in its interactions with the head of the CBI.
    • Balancing accountability with autonomy: Of course, as a measure of accountability, the Director will have to keep the government informed of all major administrative decisions.
    • He or she should inform the executive but not take orders from it.
    • Need for CBI Act: Successive chiefs have suggested the drafting of a CBI Act to ensure that the organisation is not dependent on the State governments, many of which have withdrawn consent for the CBI to function in that State.
    • Eight States — West Bengal, Maharashtra, Kerala, Punjab, Rajasthan, Jharkhand, Chhattisgarh, and Mizoram — have withdrawn the general consent.
    • The CBI should be made to derive its authority for launching investigations from its own statute instead of depending on the Criminal Procedure Code, which makes the CBI a police organisation.

    Issue with ordinance

    • The only problem with the latest ordinance is that, at the end of the mandatory two-year tenure, the government will have to issue orders granting one-year extensions at a time. 
    • The rule about three annual extensions can be misused by a tendentious government.
    • It may be construed as a reward for ‘good behaviour’, which is a euphemism for an obliging Director.

    Consider the question “What are the challenges facing Central Bureau of Investigation? Suggest the measures to make the organisation more effective.” 

    Conclusion

    We will have to wait for a few years to gauge the impact of the change in tenure rules. It is preposterous to probe the intentions of this major move.

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    Back2Basics: General Consent

    • A “general consent” is normally given by states to help the CBI in seamless investigation of cases of corruption against central government employees in their states.
    • Almost all states have traditionally given such consent, in the absence of which the CBI would have to apply to the state government in every case, and before taking even small actions.
    • Section 6 of The DSPE Act (“Consent of State Government to exercise of powers and jurisdiction”) says: “Nothing contained in section 5 (“Extension of powers and jurisdiction of special police establishment to other areas”) shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in a State, not being a Union territory or railway area, without the consent of the Government of that State.”

  • FCRA

    The Supreme Court has reserved its judgment on petitions challenging the validity of amendments introduced in 2020 to the Foreign Contribution (Regulation) Act, 2010, aimed at tightening the curbs on NGOs allowed to receive foreign funds.

    About FCRA

    • The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
    • First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations.
    • The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
    • It is mandatory for all such NGOs to register themselves under the FCRA.
    • The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

    Why was FCRA enacted?

    • The FCRA sought to consolidate the acceptance and utilisation of foreign contribution or foreign hospitality by individuals, associations or companies.
    • It sought to prohibit such contributions from being used for activities detrimental to national interest.

    What was the recent Amendment?

    • The FCRA was amended in September 2020 to introduce some new restrictions.
    • The Government says it did so because it found that many recipients were wanting in compliance with provisions relating to filing of annual returns and maintenance of accounts.
    • Many did not utilise the funds received for the intended objectives.
    • It claimed that the annual inflow as foreign contributions almost doubled between 2010 and 2019.
    • The FCRA registration of 19,000 organisations was cancelled and, in some cases, prosecution was also initiated.

    How has the law changed?

    There are at least three major changes that NGOs find too restrictive.

    • Prohibition of fund transfer: An amendment to Section 7 of the Act completely prohibits the transfer of foreign funds received by an organisation to any other individual or association.
    • Directed and single bank account: Another amendment mandates that every person (or association) granted a certificate or prior permission to receive overseas funds must open an FCRA bank account in a designated branch of the SBI in New Delhi.
    • Utilization of funds: Fund All foreign funds should be received only in this account and none other. However, the recipients are allowed to open another FCRA bank account in any scheduled bank for utilisation.
    • Shared information: The designated bank will inform authorities about any foreign remittance with details about its source and the manner in which it was received.
    • Aadhaar mandate: In addition, the Government is also authorised to take the Aadhaar numbers of all the key functionaries of any organisation that applies for FCRA registration or for prior approval for receiving foreign funds.
    • Cap on administrative expenditure: Another change is that the portion of the receipts allowed as administrative expenditure has been reduced from 50% to 20%.

    What is the criticism against these changes?

    • Arbitrary restrictions: NGOs questioning the law consider the prohibition on transfer arbitrary and too heavy a restriction.
    • Non-sharing of funds: One of its consequences is that recipients cannot fund other organisations. When foreign help is received as material, it becomes impossible to share the aid.
    • Irrationality of designated bank accounts: There is no rational link between designating a particular branch of a bank with the objective of preserving national interest.
    • Un-ease of operation: Due to Delhi based bank account, it is also inconvenient as the NGOS might be operating elsewhere.
    • Illogical narrative: ‘National security’ cannot be cited as a reason without adequate justification as observed by the Supreme Court in Pegasus Case.

    What does the Government say?

    • Zero tolerance against intervention: The amendments were necessary to prevent foreign state and non-state actors from interfering with the country’s polity and internal matters.
    • Diversion of foreign funds: The changes are also needed to prevent malpractices by NGOs and diversion of foreign funds.
    • Fund flow monitoring: The provision of having one designated bank for receiving foreign funds is aimed at making it easier to monitor the flow of funds.
    • Ease of operation: The Government clarified that there was no need for anyone to come to Delhi to open the account as it can be done remotely.

     

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