Colour of money
Posted online: Friday, July 27, 2007 at 0000 hrs Print Email
Good that even Congress says precaution, not paranoia, should guide law on foreign contribution
Paranoia is not a very useful attribute when it comes to policy making. Some aspects of the Foreign Contribution (Regulation) Bill, 2006, which seeks to regulate the acceptance and utilisation of foreign contributions by groups and associations in India, betray a fairly high degree of paranoia. It is welcome, therefore, that the Congress has openly expressed disquiet over some of its provisions. The party has rightly made the distinction between efficacy and stringency. It argues that while the proposed law needs to play its role in regulating money flows effectively, it should not be irrationally stringent by attempting to address lurking dangers where there are none.
This bill will replace the Foreign Contribution (Regulation) Act of 1976. Most laws passed during the short and brutal interregnum of the Emergency were marked by two characteristics: a profound distrust of citizens and overwhelming fear of the “foreign hand”. FCRA, 1976, was no exception. Indira Gandhi’s regime believed that every paisa coming into the country needed to be monitored. The new bill, although conceived in an era far removed from the mai-baap sarkar of yore, does not quite leave that unhappy legacy behind. Not only do organisations seeking foreign contributions have to get certificates from the home ministry before being entitled to receive such funds, there are stipulations on how the funds received are to be spent. The manner the bill defines ‘foreign source’ is itself problematic. Organisations in India that have a foreign shareholding of over 50 per cent — Infosys, with 50.1 per cent foreign shareholding for instance — would be considered a foreign source.
Another problem is the ‘home ministry mindset’ that heavily informs this piece of legislation currently. It would be apt here to recall the recent debate over foreign direct investment in the National Security Council Secretariat when the ministries of external affairs and finance were successful in blocking the proposal to list “countries of concern” when it came to FDI proposals. Instead of blanket bans and blacklists, a regime that could quickly identify “entities which require special scrutiny” is to be put in place. Something similar could be envisaged for foreign contributions as well. Instead of putting large collectivities under the bureaucratic scanner, we need to efficiently zero in and screen out money flows from only those elements and agencies that pose a credible threat to the country. Precautions, not paranoia, should be the email@example.com
Friday, July 27, 2007
Colour of money