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Foreign
Contributions Bill
Need for a more humane law
In the whole exercise, the government
did not consult the voluntary sector, except through informal
discussions in the seminars. This amounts to the Centre’s apparent
lack of faith on the concerned stakeholders.
The
Union Cabinet has cleared the Bill to repeal the 30-year old Foreign
Contribution (Regulation) Act, 1976. To be
tabled in the current session of
Parliament, it seeks to provide more teeth to the enforcement
agencies to regulate donations from abroad. The proposed Bill’s
preamble has been reworded to prohibit acceptance and utilisation
of foreign contribution or foreign hospitality for any activities
detrimental to national interest. It also bars several organisations,
including those of a political nature and electronic media houses
and journalists from receiving foreign funding. Enacted in 1976 and
amended in 1984 and 1991, the FCRA has been monitoring the receipt
and utilisation of foreign contribution received by NGOs and civil
society organisations including
academic institutions.
The Union Cabinet has cleared the Bill
after due examination in past two years. In July, the Union Home
Ministry announced the Act’s repeal and a new law. Later, the Group
of Ministers decided to revise the FCRA. In the whole exercise,
however, the government did not consult the voluntary sector, except
through informal discussions in the seminars. This amounts to the
Centre’s apparent lack of faith on the concerned stakeholders. The
process of consultation always gives the stakeholders due confidence
and ownership, setting a model of partnership as in the case of the
preparation of the proposed National Policy on Voluntary Sector by
the Planning Commission. This policy is currently awaiting the
Cabinet’s green signal.
The Bill contains some tough regulatory
measures to regulate the expenditure, utilisation and accounting of
registered association receiving foreign grants and contributions. A
notable provision is the renewal of registered associations under
the FCRA every five years. This will have a negative impact on
registered associations both from the perspective of reporting and
good work of most grassroots voluntary organisations. It proposes
stricter control and regulation of registered associations receiving
foreign charity and grant. This is surprising because business and
economy is being liberalised and a more enabling environment is
being built up. On one hand, the government allows micro finance
institutions with pre-decided end use to raise financial resources
up to US $ 5 million through external commercial borrowing (ECB)
route. And, on the other, it is imposing curbs on registered
associations receiving foreign grant and charities. This is a clear
policy contrast.
The Bill aims at providing an effective
mechanism to regulate expenditure, utilisation and accounting of
foreign funding received in this country. It also provides for
proscribing the use of foreign contribution or any income arising
out of it for speculative business. There is, however, little
clarity on “speculative investment”. More so when the Income- Tax
laws allow charities to invest in government approved securities and
mutual funds. The Bill also stipulates for government permission
before receiving funds from abroad after the identification of the
person, areas and purposes for which funding is required is
mentioned. This would bring in subjectivity in dealing with
situations that may arise of specific contexts. The Bill provides
for use of foreign funding through more than one bank account,
besides sharing of information with security agencies on
contributions beyond the specified amount. Information sharing with
security agencies on account of suspicion will make things worse for
many voluntary organisations. It has provisions for compounding of
certain offences. To maintain transparency, it includes a provision
whereby an individual or an organisation should be informed why
registration has been refused. On the face of it, this may sound
reasonable, but voluntary organisations would find it difficult to
deal with such situations.
The Bill is comprehensive with all kinds
of controls and regulations on the voluntary sector, but is silent
on issues relating to speedy justice for registered associations.
Every sector has a concept of appointing either an Ombudsman or a
regulatory authority vested with rights and obligations to provide
justice to those who suffer. In the case of the FCRA Bill, it would
be eminently desirable to set up an independent and autonomous
regulatory authority or Ombudsman for providing quicker justice to
the victims. Such a mechanism will go a long way in helping those
seeking justice. It is noteworthy that the Planning Commission has
prepared a National Policy on Voluntary Sector setting a broad
contour of a meaningful partnership between the voluntary sector and
the government, involving voluntary sector representatives. Deemed
as a blueprint on the government’s policy intent, this incorporates
the need to create an enabling environment and simplify procedures
for effectiveness and self-regulation of the voluntary sector in a
holistic manner. It would be in the fitness of things if the policy
on voluntary sector gets ready.
Otherwise, once the proposed Bill is
passed by Parliament, there could be a situation of policy paradox
before the voluntary sector. The voluntary sector stands by the
Centre’s concerns on national safety and security. However, the Bill
conditioning the receipt, utilisation and accounting of foreign
funds with stricter control and regulation will kill the spirit of
voluntary action. The enforcement agencies must punish the rogue
organisations with exemplary measures within the framework of the
existing laws to promote and protect the larger public good. A more
humane law, enabling legal and political environment and speedier
justice mechanisms will not only ensure quality compliance amongst
stakeholders but also create a germinating ground of faith and
confidence building measures. The voluntary sector has appealed to
the government to intervene in the matter to provide voluntary
sector an enabling environment for continuance of their good work in
larger public good. It remains to be seen whether the Union
Government is committed to helping the voluntary sector.
The former is aware of the fact that the
latter has been working hard and contributing to the Gross National
Product to the tune of 3 per cent. The government would do well to
avoid the policy paradox. In view of the past role played by the
voluntary organisations over the years and their current
contribution in nation building, a more liberal, enabling and humane
legal framework needs to be evolved. Stringent legal systems have
killed the spirit of voluntary action elsewhere internationally. And
they will have the same potential in our case too in the context of
much in deeper grassroots realities.
6 December 2006
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