Govt cancels FCRA registration of CFA, cites incorrect tax filings

In a stark reminder of similar action against various NGOs in the past, the Union home ministry on Wednesday cancelled the Foreign Contribution Regulation Act (FCRA) registration of the parent entity of the Centre for Financial Accountability (CFA).

A non-profit organisation known for its critical analysis of financial institutions and their impact on development, human rights, and the environment, CFA has now been rendered ineligible to receive fresh foreign donations and must seek the ministry’s clearance to use existing foreign contributions.

The Centre cited incorrect tax filings for the financial years 2017-18 and 2018-19 as the primary reason for the cancellation. However, CFA executive director Joe Athialy contends that the action is politically motivated, alleging that the government’s real motive is to silence dissent.

Athialy pointed out that the government did not flag these tax discrepancies over the past six years, nor did it give the organisation a chance to rectify them. “Companies are typically allowed to correct filing errors,” he told Scroll.in. “They are not shut down outright.”

The CFA, a project of the non-profit India Institute for Critical Action Centre in Movement, has been receiving foreign funds since its establishment in 2005. The Centre’s action follows a larger trend under the Narendra Modi government and home minister Amit Shah, who have frequently wielded the FCRA to clamp down on non-profit organisations.

Between 2016-17 and 2021-22, more than 6,600 NGOs lost their FCRA licences, with nearly 20,700 NGOs losing their licences over the last decade, according to government reports. This January, the government also revoked the FCRA registration of the Centre for Policy Research, a prominent 50-year-old think tank.

Athialy further claimed that this move fits a broader pattern of the government targeting critics and dissenters and referenced other instances such as the Bhima-Koregaon case involving activist Stan Swamy and the incarceration of Umar Khalid in connection with the 2020 Delhi riots, to highlight a perceived trend of punitive actions against those who question the government.

The recent report by CFA on environmental risks posed by the Adani Group in Gujarat’s Kutch and another on arrests in Madhya Pradesh’s Singrauli district related to an Adani coal mine, have also put the organisation under scrutiny.

The cancellation has severe implications for CFA's operations and its nearly 40 employees. “At the end of this month, we won’t have money to pay the salaries of our employees,” Athialy told The Wire. The loss of the FCRA licence not only blocks foreign donations but also freezes access to the organisation’s foreign contribution bank account.

“The government is unable to create new jobs but is happy to take away existing ones,” Athialy remarked, underlining the broader socio-economic impact of the move.

Athialy disclosed that CFA’s board will meet next week to discuss potential legal responses to the cancellation. As the organisation grapples with the immediate fallout, the broader implications for civil society and dissent in India remain a pressing concern.