“Foreign contributions, if unregulated, can cause devastating consequences to the sovereignty of the nation,” Solicitor General Tushar Mehta told a bench led by Justice AM Khanwilkar, which is hearing a challenge to the government’s 2020 Act. NGOs and activists argue that the law will have the effect of choking foreign donations to India.
The government argued in court that it wouldn’t. “Experience shows that various governments in foreign countries were infusing funds into India,” Mehta alleged, without getting into the specifics. The government accordingly changed the law to trace the utilisation of such funds in India, he said.
Under the new law, any NGO, which is registered to get foreign contributions, cannot transfer such contributions. It also places the NGO under an obligation to spend only 20% of the amount on administrative expenses as opposed to the earlier 50%.
This would hit foreign donations coming into the country, a petition filed in court by social activist Noel Harper of NGO Care and Share, argued. His petition is one among many challenging the 2020 Act. Mehta argued that NGOs would earlier sub-delegate the funds to others and these sub-delegates would be under no obligation to limit the use of these funds for administrative purposes.
As a result, all the funds would sometimes be spent by a chain of NGOs for administrative expenses, he said, effectively leaving no funds to be utilised for any public good.
The law mandates all NGOs to receive such funds only at SBI, New Delhi, but these may be kept and utilised in any scheduled bank elsewhere. The office-bearers of such organisations would have to submit their Aadhaar cards for identification purposes.
The government is also authorised to prevent utilisation of such funds if, on a summary enquiry, it finds the organisation guilty of misuse of the provisions of the Act.