Thursday, May 10, 2007


Double standard on foreign money Yes to Industry, no to NGO


If Parliament's Standing Committee on Home Affairs, which is currently deliberating on the Foreign Contribution (Regulation) Bill, 2006, decides that repealing and replacing the FCRA, 1976, is good and fine, NGOs and Media will lose another slice of freedom.

By Paranjoy Guha Thakurta

There are non-governmental organisations and there are NGOs. There are NGOs that spend more on their staffers than on the underprivileged for whom their hearts are supposed to be bleeding. And there are NGOs and quasi-NGOs (or QUANGOs) that have made a huge difference to lives of ordinary people, much more than the government and corporate bodies have. Philanthropy may not change the planet we live in, but there should be very good reasons for not encouraging the transfer of wealth and resources from the rich to the poor in this highly unequal and stratified society of ours. It is this context that the Union government's hamhanded efforts to regulate the flow of foreign funds to NGOs should be condemned in no uncertain terms.
Parliament's Standing Committee on Home Affairs is currently deliberating on the Foreign Contribution (Regulation) Bill, 2006, which, if enacted, would repeal and replace the Foreign Contribution (Regulation) Act (FCRA), 1976. The opening sentence of the bill says that it is meant “to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto”.
The intention of the bill appears quite reasonable. Or does it? A perusal of the bill's fineprint reveals the devil in the detail and makes apparent why a host of representatives of NGOs have described the proposed new law as “draconian”, “dangerous” and of “questionable merit” that would “stifle” and “choke” the way in which civil society organisations work. It is argued that the bill would give power to civil servants to “interfere” and “undermine” the activities of NGOs and violate the human rights and democratic freedom of their representatives.
Are NGOs overreacting? Is the government justified in wanting to closely control and monitor the flow of foreign funds coming to civil society groups, some of whose activities could be construed as antinational, or even subversive?
The bill proposes a blanket prohibition of foreign contributions to organisations of a “political nature, not being political parties”. Under the FCRA, 1976, such “political” organisations could receive foreign funds only after the prior permission of the ministry of home affairs (MHA), which is responsible for administering the Act. The new bill, however, leaves it to the subjective judgement of bureaucrats to determine whether or not the activities, ideology or programmes of a particular NGO have any association with those of a political party.
The bill states that the Union government will provide a certificate of registration or give prior permission to an organisation to receive foreign contributions if it is satisfied that the applicant “has undertaken meaningful activity in its chosen field for the benefit of the people” or “has prepared a meaningful project for the benefit of the people”. Once again, the word “meaningful” and the phrase “benefit of the people” are open to be interpreted in a highly discretionary manner.
Whereas the registration of an NGO is permanent and free under the current FCRA, the new bill requires recipients of foreign funds to renew their registration every five years and introduces a scheme of payment of fees for registration, renewal of registration and prior approval for receipt of funds. Representatives of NGOs say this provision in the bill would not only generate inconvenience but could also lead to harassment by government officials. They point out that NGOs are, in any case, subject to existing laws such as the Income Tax Act and have to have their accounts audited.
The bill also seeks to impose a 50 per cent limit on the total quantum of foreign contributions received by an NGO that can be spent as “administrative expenses”. Significantly, the bill contains certain provisions meant for the media. It prohibits any association, company, correspondent or editor engaged in the production or broadcast of audio or audiovisual news or current affairs programmes from receiving foreign contributions. In other words, if the new bill becomes law, no foreign organisation can provide a grant to an Indian organisation to make a radio or television programme or a
documentary film meant for broadcast. It should be noted that this particular provision of the bill, tabled in the Rajya Sabha on December 18, 2006, has been almost completely ignored by the country's media, which is usually alert about any attempt by the government to encroach on its independence.
The FCRA came into existence during the infamous Emergency period when Indira Gandhi was prime minister. During the 1980s and the 1990s, various amendments were made in the act and rules were introduced to enable the MHA to exercise greater control over the activities of NGOs. One such rule pertained to seeking prior permission of the government before an NGO could change its office bearers or directors. It was in June 2005 that the MHA first stated that a new bill to amend the FCRA was in the offing, well after the Foreign Exchange Management Act as well as the Prevention of Money Laundering Act had been enacted.
A few important points need to be noted in the context of the bill to amend the FCRA. There are some in the Bharatiya Janata Party who believe that foreign funds received by NGOs have been used (and continue to be used) to “convert” poor Hindus into Christians. We are all aware of what the views of the Rashtriya Swayamsevak Sangh are in this regard. Although the National Democratic Alliance government was voted out of power in May 2004, there are undoubtedly quite a few in the bureaucracy, and perhaps even in the ruling Congress party, who believe that foreign contributions to NGOs should be curbed for this reason alone. Then, as far as the source of funds of NGOs is concerned, it is fairly simple for government authorities to ascertain where foreign money is coming from because all such transactions have to take place legally through regular banking channels. Why, then, is there need to exercise more controls?
It is curious that the government should be seeking to curb and monitor the flow of foreign funds to NGOs when it is bending over backwards to welcome foreign direct investment as well as foreign institutional investors in the country's stock markets. Finally, the MHA is dominated by police officers and their attitudes have clearly been reflected in the manner in which the bill to control foreign contributions has been drafted. As the old saying goes, the government is trying to use a sledgehammer to swat a fly.

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