March 2, 2007.
To,
Shri Rohtas,
Under Secretary
Rajya Sabha Secretariat,
Parliament House Annexe,
New Delhi -110001
Sir,
Subject: FCR Bill 2006
That is has reference to the above that we are enclosing our appeal on FCR Bill 2006.
We are deeply concerned over the proposed amendments in the FCR Bill 2006, as the Bill aims to tighten various requirements of the 1976 Act. The FCR Bill 2006 is being brought at a time when the government is also close to announcing its national policy on voluntary sector, giving conflicting message to the sector. It is noteworthy that the policy on voluntary sector has been scripted by the voluntary sector representatives, charting out a comprehensive framework of partnership between the government and the voluntary sector. The policy also aims to set up a mechanism to advance the social sector and its out reach to the common people through the participation of the voluntary sector.
The FCR Bill 2006 has several proposals and provisions that have the potential of impacting good work undertaken by the voluntary sector in the country. There has been a rich tradition of philanthropic services that the voluntary sector has rendered over a long period of time which have benefited the people at large. In supporting such activities of the voluntary sector, government, foreign donors and corporates have come forward and supported innovative activities of the voluntary sector, which have brought about awareness and empowerment amongst people, making the democratic institutions richer and more vibrant. More so, these changes are being effected at a time when countrys economic landscape is getting liberalized, single window clearances have become a norm and flow of funds to sectors of economy have been made easier indicates a reverse trend in the policy regime.
We will also like to bring to your kind notice some of the following key issues as contained in the FCR Bill which are likely to have an adverse impact on the activities of the voluntary sector. These factors will not only impact voluntary sector adversely but also weaken their initiatives that they have been taking to bring effective solutions to the last mile post-the common people:
- Grant of Certificate of Registration and Renewal of Certificate every five years. This will create an environment of uncertainty both for the voluntary sector and also for the donors who wish to commit a long term support to them.
- Restriction to utilize foreign contribution for administrative purpose up to 50% of the grant. This will create problem for advocacy, human rights and research and development agencies, which have to spend a large part of their resources in holding meetings, conducting researches and preparing reports.
- Prohibition of foreign donation to organisations of political nature, not being political party. The provision is open ended and subject to interpretation as any advocacy agency may well come under the purview of being an organization of political nature.
- Speculative Investment vis-à-vis sec.11(5) of Income Tax Act 1961 (any foreign contribution or any income arising out of it shall not be used for speculative business). Income Tax Act 1961 already has sufficient provisions in this regard and any further explanation may be undertaken by the Income Tax Authorities and the Ministry of Finance in case of any such need.
- Organisations seeking FCRA registration should not be engaged into activities involving conversion through inducement. This is a discretionary provision and may result in harassment of voluntary agencies.
- Definition of foreign source in the bill describing companies with more than 50 per cent foreign shareholding become a foreign entity. This provision needs to be looked into as many Indian companies such as ICICI, HDFC, Infosys may well become a foreign entity in their own country, defeating the very purpose of being leading good will Indian companies.
It is also noteworthy that most of the objectives of the Bill are met by other laws in force such as Unlawful Activities Prevention Act 1967, the Prevention of Money Laundering Act, 2002 and the Foreign Exchange Management Act, 1999. Auditing and reporting issues of voluntary organizations are already covered by the Income Tax Act, 1961, as well as the laws governing companies, trusts, societies etc. The prohibition of use of foreign funding by judges, bureaucrats and government officials are part of their service rules, while that for electoral use is covered by the Representation of the People Act, 1951. If there are any loopholes that need to be plugged, amendments to the respective Acts and Rules might be an efficient method to achieve the desired results as are intended through the FCR Bill 2006. These measures would cover all the issues being addressed by FCRA, and make it redundant.
It is also noteworthy that slew of reporting requirements at all levels including the dealing banks, NGOs and the government itself are complex and may not serve the intended purpose of the FCRA bill 2006 and the provisions contained therein. The focus of the government machineries on better administration of the existing provisions rather than regulation and monitoring through the route of amendments of the FCR bill would produce better results.
In light of the above, we are submitting our concerned views on the FCR Bill 2006 and request the standing committee to consider the same sympathetically in the context of creating a more liberal and enabling regime for the voluntary sector, that has long been associated with development projects and programmes intended to service the common and the poor population in the country for a long period of time.
Thanking you,
Yours sincerely,