A range of measures has been instituted in recent times to deal with the scourge of corruption, including the demonetisation of the high-value notes. Indian industry welcomes these steps, which help infuse transparency and probity into the business environment. However, care must be taken to distinguish between corrupt and legitimate activities or actors.
One of the measures, the Lokpal and Lokayuktas Act, 2013 (L&L Act), was introduced for dealing with complaints of corruption against public servants. The definition of ‘public servant’, however, includes a gamut of directors, managers, secretaries or other officers of societies, associations and trusts that receive government funding of more than Rs 1 crore or foreign funding more than Rs 10 lakh for their charitable or philanthropic activities.
Going by this definition, public servants should furnish particulars of their assets and liabilities as well as those of their spouses and dependent children to the authorities. Non-compliance with this will be imply that the official has acquired the assets through corrupt means and is liable for action against him/her under the Prevention of Corruption Act 1988.
There are several ambiguities in the L&L Act, which, in current form, strongly discourages the participation of citizens in social and humanitarian activities.
In recent times, the Prime Minister has undertaken a number of seminal initiatives that envisage greater engagement of non-governmental organisations, civil society and ordinary citizens. For instance, the Swachh Bharat Abhiyan places the responsibility of constructing public toilets on the private sector. Under the Swachh Bharat Mission (Gramin), the expertise of civil society is being leveraged with authority to manage strategic operational issues.
So, the current definition of public servant in the Act also brings into its ambit persons who neither perform a public duty nor receive emoluments from the government or enjoy authority or representation in the service of the government. Officials or directors of trusts, societies and associations, therefore, can in no way be included under this definition.
Financial irregularities by institutions and individuals are, in fact, covered through several other pieces of legislation and policies such as the Indian Penal Code, the Prevention of Corruption Act, the Foreign Currency Regulation Act, the Companies Act, the Income Tax Act and so on.
One repercussion of the provisions of this Act could be loss of talent in the NGO sector, if eminent personalities opt out. It is estimated that there are more than 3 million functioning NGOs with about 18 million persons serving on their boards, most of them on an honorary basis. Some of these could prefer to step down rather than be subject to onerous additional declarations.
One suggestion is to allow organisations to notify one of their key officials as a point person who would be responsible for compliance and liability, while excluding all other directors and employees.
Secondly, there is need to define the extent of financing by the government as many organisations receive tax incentives, grants or other assistance. Instead of the vague term ‘wholly or partly financed’, the threshold could be set at 75% or more of an average of three immediately preceding financial years’ operating budget received from the government.
Third, it is suggested that the provision to include organisations receiving foreign currency under Section 14(1)(h) should be deleted altogether, since this is covered under the FCRA. These are private funds and their misuse or diversion does not constitute corruption as in the L&L Act.
Reworking the L&L Act would contribute to the participation of prominent individuals, specialists, and experts in social, philanthropic and charitable work and ensure their invaluable voluntary engagement with India’s development.
Chandrajit Banerjee is director general, Confederation of Indian Industry.The views expressed are personal.