The Proposed FCRA Bill
by Pooran Chandra Pandey
Stringent legal systems will kill the spirit of voluntary action unless they are grounded in grassroots realities
The voluntary sector is concerned and alarmed over recent developments following the clearance of the revised FCRA bill in a cabinet meeting chaired by the Hon’ble Prime Minister, and subsequently introduced in the Rajya Sabha (Upper House) during the recently concluded winter session of Parliament. The bill has since been referred to the Department related Parliamentary Standing Committee on Home Affairs for further consideration of the proposed provisions and also to frame laws and rules to define various bare clauses. The proposed bill provides for repeal of the 30 year old Foreign Contribution (Regulation) Act of 1976, giving more teeth to 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 the national interests. The proposed law also bars several organisations, including those of a political nature and electronic media houses, and journalists from receiving foreign funding. It may be recalled that the FCRA was enacted in 1976, amended in 1984 and 1991, and has since been monitoring the receipt and utilisation of foreign contribution received by NGOs and civil society organisations including academic institutions in our country.
The current stage of introduction of the proposed FCRA bill reached after due diligence of the government lasting for 2 years. The first public knowledge of the development came to the light last July when the ministry of home announced the repeal of the FCRA and introduction of a new law in form of proposed FCMC. The group of ministers (GoM) later decided to drop FCMC and went ahead with the revised FCRA. In the whole due diligence process, there has been an absence of the government’s consultation with the voluntary sector except through seminars. Absence of the institutional process in a dialogue on policy making with the concerned stakeholders clearly shows the lack of willingness to engage with the sector and to some extent the lack of faith. The process of consultation always gives the stakeholders confidence and ownership setting a model of partnership as has been the case in preparation of the proposed national policy on voluntary sector by the Planning Commission currently pending before the cabinet for its nod.
The revised FCRA bill contains some tough regulatory measures to regulate the expenditure, utilisation and accounting of registered association receiving foreign grants and contributions. Notable amongst the proposed provisions as contained in the proposed bill include renewal of registered associations under FCRA every five year. This provision will have potentially negative impact on registered associations both from the perspective of reporting and also in continuance of the good work of many of the grass-roots voluntary organisations. Most important of all, the proposed law has provided for stricter control and regulation of registered associations receiving foreign charity and grant at a time when business and economy is being liberalised and more enabling environment is being built up. On the one hand, the Government allows micro-finance institutions with pre-decided end use to raise financial resources upto USD 5 million through external commercial borrowing (ECB) route and on the other hand imposition of restrictions on registered associations receiving foreign grant and charities. This is the clear policy contrast.
The intent of the new bill seems to be providing a more efficient way to regulate expenditure, utilisation and accounting of foreign funding received in this country. It also has a provision for proscribing the use of foreign contribution or any income arising out of it for speculative business. There is however a little clarity amongst and between the ministries what the term ‘speculative investment’ means. More so, when income tax laws allow charities to invest in government approved securities and mutual funds. The proposed bill also stipulates that government permission be obtained before receiving funds from abroad after the identification of the person, areas and purposes for which funding is required is mentioned. The provision has the potential to bring in subjectivity in dealing with situations that may arise of the specific contexts. The proposed bill also 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. Sharing of information with security agencies on account of suspicion will make things much the worse for many grassroots voluntary organisations.
The proposed bill also has provisions for compounding of certain offences, besides fixing 180 days as the upper limit for suspension of a registration certificate. In order to maintain transparency, the proposed bill includes a provision whereby an individual or an organisation will have to be informed about the grounds on which registration has been refused. The provision looks good on the face of it but actual implementation will be the real test for voluntary organisations who find it hard to deal with such situations.
The proposed bill seems to be quite comprehensive with all kinds of prohibitions, controls and regulations on the voluntary sector but has not addressed the issues relating to obtainment of speedier justice for registered associations in case of denial of justice. Every sector has a concept of appointing either an Ombudsman or a regulatory authority which is vested with the rights and obligations to provide the justice to those who suffer. In case of the proposed FCRA bill, it will be a good idea to set up a regulatory authority / Ombudsman for providing quicker and speedier justice to those who stand denied of the same. Institutionalising such a mechanism will go a long way in creating a justiceable ground for those seeking justice in the process of delivery of policy provisions of law.
It is noteworthy that the Planning Commission has also prepared a national policy on the voluntary sector, setting the broad contours of a meaningful partnership between the voluntary sector and the government, involving voluntary sector representatives. The proposed policy on the voluntary sector is a comprehensive blueprint of the policy intent of the government on the voluntary sector incorporating 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 the merit that the sector first has the policy on voluntary sector otherwise we would see a situation here of ‘policy paradox’, following the passage of the proposed FCRA bill before the voluntary sector policy.
The voluntary sector stands by government’s concerns on safety and security of the nation, feeling at the same time that the proposed FCRA bill conditioning the receipt, utilisation and accounting of the foreign funds with stricter control and regulation will kill the strong spirit of voluntary action. The enforcement agencies must punish the rogue organisations with exemplary measures within the given framework of existing laws ensuring that the larger public good remains intact in the process. 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 the voluntary sector an enabling environment for continuance of their good work in larger public good. What remains to be seen is the fact the commitment that the current dispensation in Delhi is willing to show to the voluntary sector which has been genuinely working hard and contributing to the gross national product to the tune of 3 per cent and also avoid the policy paradox as both the proposed FCRA bill and national policy on voluntary sector both pending before the cabinet. “
In view of the past role played by the voluntary organisations 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 have the same potential in our case in context of existence of much deeper grassroots realities.
The predicament of the bill is that it has missed somewhere along the time to balance real concerns of the government with legitimate demands of the voluntary sector, especially at a time when the government is at advanced stage of finalisation of a national policy of voluntary sector. The crying point though remains absence of an institutionalised dialogue of the government with the voluntary sector that would enable both sides understand each other’s concerns and take suitable measures in ensuring the policy ownership by those who would actually use it.
At a time when India seems all poised for a giant economic leap, how can the government ignore voluntary sector that has played a catalyst’s role in advancement of development agenda and innovated various schemes that were later adopted both by the government and international agencies for their scaling up and turning those innovations into economically viable products.
Intro- Pooran Chandra Pandey is Chief Executive Officer,VANI
PULL QUOTES
“The intent of the new bill seems to be providing a more efficient way to regulate expenditure, utilisation and accounting of foreign funding received in this country.”
“The proposed bill is quite comprehensive with all kinds of prohibitions, controls and regulations on the voluntary sector but does not address issues relating to obtainment of speedier justice for registered associations in case of denial of justice.
“The proposed policy on voluntary sector is a comprehensive blueprint of the policy intent of the government.”
“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.”