Eminent Persons Send Open Letter to Prime Minister to reconsider the Foreign Contributions (Regulation Bill), 2006

[Commonwealth Human Rights Initiative: Tuesday April 8, 2008]

Several eminent people have expressed alarm at the provisions of the Foreign Contributions (Regulation) Bill, 2006. The proposed legislation was first introduced by the UPA Government in the Rajya Sabha in December 2006. It is likely to be introduced again in the next session of Parliament after being vetted by the Parliamentary Committee on Home Affairs.

In an open letter to the Prime Minister signatories to the letter Mr B.G Verghese, Dr M.S Swaminathan, Mr Soli Sorabjee, Mr Fali S. Nariman, Mr Pratap Bhanu Mehta, Justice Ruma Pal, Admiral R.H Tahiliani, Ms Sunita Narain, Mr Alok Mukapadhyay, Mr Jagadananda, Mr Bhaskar Rao, Mr Ashok Khosla and Mr Nitin Desai, have asked the government to reconsider introduction of the Bill on the grounds that it creates a highly restrictive and discriminatory regulatory regime for civil society organisations receiving foreign contributions for their work.

The Bill comes at a time when India’s voluntary or non-profit sector is being celebrated the world over for its achievements in various fields including the right to information and environmental protection. A significant number of NGOs in the country receive funds from well respected international donor organisations that fund similar initiatives in other countries. Notably, the Bill runs completely counter to the National Policy on the Voluntary Sector 2006 which pledges to encourage, enable and empower voluntary organisations, and lists enabling them to legitimately mobilise necessary financial resources from India and abroad as a specific objective. However, in reality the new law would give executive authorities vast discretion – without adequate checks and balances – to clamp down on foreign funding for NGOs and thereby prevent their functioning. NGOs critical of government policies will be particularly vulnerable under the proposed legislation.

The open letter ends with the following appeal: “In the interests of safeguarding the fundamental freedoms of speech, expression and association, we urge the Union Cabinet to reconsider passing the Foreign Contribution (Regulation) Bill, 2OO6. Enactment of such a Bill can undermine democratic space and the independence of the voluntary sector in India which presently provides.

Text of the letter:


Dr Manmohan Singh
Honourable Prime Minister of India

Subject: Open letter to reconsider the Foreign Contribution (Regulation) Bill, 2006

Respected Prime Minister

We are sending you this open letter to express our deep concern at the restrictive nature of the Foreign Contributions (Regulation) Bill, 2006, approved by your Cabinet. The Bill runs counter to the National Policy on the Voluntary Sector that is pledged to encourage, enable and empower voluntary organisations. In contrast, the Bill permits broad executive discretion, allows subjective satisfaction in decision-making and provides limited recourse to procedural safeguards.

The present Foreign Contribution (Regulation) Act, 1976, Foreign Exchange Management Act, 1999, the Prevention of Prevention of Money Laundering Act, 2002 and the Unlawful Activities Prevention Act, 1967 already provide a robust framework to prevent misuse of funds or their diversion towards anti-national or terrorist activities.

We have reservations on the following grounds:

• The aim of the Bill, as stated in the preamble is to prohibit the acceptance and use of foreign contribution for activities detrimental to ‘national interest’, a subjective and malleable term, open to capricious interpretation. The purpose of any legislation should be to minimise not increase room for executive discretion.

• The Bill greatly increases executive discretion by prescribing a broad list of grounds to refuse a certificate of registration. Some grounds are indeterminate such as the likelihood of diversion of funds for ‘undesirable’ purposes or not having undertaken ‘meaningful’ activity or not having prepared a meaningful project for the ‘benefit’ of the people.

• The Bill requires the certificate of registration to be renewed every five years. Since no time limit is prescribed, organisations considered inconvenient by the government of the day may find themselves subject to motivated procedural delays.

• The Bill gives the executive, wide discretionary powers to cancel a certificate of registration in the `public interest’. This is too broad, and open to subjective interpretation. Cancellation of the certificate should only be permitted upon breach of specific legal obligations.

• The Bill vests executive authorities with additional powers to inspect, search and seize the property of voluntary organisations without full and complete adherence to the procedural safeguards laid down in the Code of Criminal Procedure. This has potential for undue harassment and unnecessary interference, which can negatively impact the independence of voluntary organisations.

• The Bill permits unwarranted interference in the internal affairs of an organisation by putting a cap of 50% on ‘administrative expenses’, a term which is not defined. This provision can seriously impair the work of voluntary organisations committed primarily to research and analysis.

• The Bill seeks to exercise undue control on the financial affairs of voluntary organisations wishing to build a corpus fund by prohibiting investment of foreign contribution or its proceeds in ‘speculative’ businesses. Since the term is not defined, it remains unclear what investments are considered part of speculative business.

• The Bill arbitrarily prohibits certain categories of individuals from receiving foreign contributions. Individuals against whom prosecution for any offence is pending are debarred, in violation of the presumption of innocence. Additionally, persons convicted of any offence – however minor or unrelated to the legitimate concerns of the government to prevent misuse of funds – are prohibited from receiving foreign contributions.

• The Bill restricts the capacity of voluntary organisations to engage the services of organisations and individuals on a consultancy basis. Transfer of foreign contribution to anyone without a certificate to receive the same is prohibited under the Bill. This needs clarification to ensure that bona fide honoraria or consultancy fees are not precluded.

In the interests of safeguarding fundamental freedoms of speech, expression and association, we urge the Union Cabinet to reconsider passing the proposed Foreign Contribution (Regulation) Bill, 2006. Enactment of such a Bill can undermine democratic space and the independence of the voluntary sector in India which presently provides significant support to the people of India. This surely cannot be the Government’s intention.

With our highest regards,

1. B.G Verghese, Chairperson, Commonwealth Human Rights Initiative, New Delhi
2. Nitin Desai, Former UN Undersecretary General
3. Jagananda, Centre for Youth and Social Development
4. Ashok Khosla. Development Alternatives
5. Pratap Bhanu Mehta, Centre for Policy Research
6. Alok Mukapadhyay, Voluntary Health Association of India
7. Sunita Narain, Centre for Science and Environment
8. Fali S. Nariman, Senior Advocate, Supreme Court of India
9. Justice Ruma Pal, Former Judge, Supreme Court of India
10. Bhaskar Rao, Centre for Media Studies
11. Soli S. Sorabjee, Former Attorney General of India and Senior Advocate Supreme Court of India
12. M.S Swaminathan, M.S Swaminathan Research Foundation
13. Admiral R.H Tahiliani, Transparency International India



About Zou Sangnaupang Pawlpi Delhi

Zou Students' Association Delhi Branch
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