The FCMC Bill 2005: Sounding the Death Knell

It is unfathomable why, in the garb of guarding the security of the country and fighting global terrorism, NGOs and other civil society organisations could be restricted, regulated and strangled to the level of being non-functional. India’s tabled “Foreign Contribution Management and Control Bill” (FCMC), 2005, raises many issues of concern for the voluntary sector. The Foreign Contribution Regulation Act (FCRA) - which since 1976 has regulated the receipt and use of foreign contribution made by donors to the voluntary sector - has come under fire with allegations about foreign contributions being used to destabilise the government. This sector includes voluntary organisations, educational institutions and religious organisations. The FCMC bill is in response to those allegations.

In 1998 the UN General Assembly adopted the Declaration on the Right and Responsibility of Individuals, Groups and Organs of society to promote and protect universally recognised human rights and fundamental freedoms (otherwise known as the Declaration on Human Rights Defenders). India is a signatory to this declaration. It affirms the right of everyone to promote and protect human rights and fundamental freedoms at the national and international level. The declaration also includes a new right to “receive and use financial resources for human rights activities” (Article 13). Through the FCMC, India would be violating its own commitments made to the UN and the world community.

Foreign funds coming to India for business purposes is much larger than that contributed towards voluntary organisations working for social development. If funds regulated for business purposes are not a threat to national security how can funds for the voluntary sector that constitute less than one percent be considered a threat? The justification given by the government that funds coming to the voluntary sector are used for anti-national activities fails to hold any substance and merely reflects a prejudiced attitude.

A press release by the Ministry of Home Affairs (MHA) quotes the Home Minister as stressing the need for new legislation to replace FCRA 1976 to facilitate inflow of foreign contribution for genuine activities without compromising on national security. He further emphasises that the Bill should ensure a proper balance between twin competing objectives of facilitating flow of foreign funds for NGOs and also addressing security concerns. FCRA and now FCMC have been mainly promulgated to regulate the objectives mentioned above. The Government’s concerns can be regulated under the existent FEMA with new initiatives introduced such as multiple bank accounts to regulate monitoring of funds. New legislation in totality is just not necessary.

The first ever seminar on FCRA, 1976 was organised on 24th and 25th of June 2005 by the MHA and the Institute of Chartered Accountants. The seminar was pegged as a curtain raiser for FCMC Bill 2005 and the deliberations held were mainly centered around educating civil society about the provisions of the Bill. It was, however, hugely disappointing for the NGO sector as they hardly got a chance to express their views. The fact that there were only two speakers from the sector to address the issue with the rest comprising of government officials, showed just how respected the opinion of NGOs were.

A vibrant and dynamic civil society is a must for any democratic polity to function. The government in the past has recognised this, reflected in the words of Home Secretary “we are convinced of the potentialities of the NGOs in India.” However, the new Bill threatens to derail the structure of NGOs who are being singled out in the name of preserving internal security. Statements such as that of S.K. Panda, Special Director, Enforcement Directorate allegedly terming NGOs as ‘risk customers’ further sabotage the already delicate relationship between the government and the voluntary sector. Led to believe that the new Act would liberalise receipts into the sector, its intention serves quite opposite the effect.