Social Capital: Summary | Indian Polity for UPSC CSE PDF Download

Summary of Recommendations on Social Capital

1. New Legal Framework for Charities in India
   • The Union Government should draft a comprehensive model legislation covering both Trusts and Societies in lieu of the existing laws on Societies, Trusts, Endowments and Charitable Institutions etc.
   • The proposed model legislation should indicate a cut off limit with regard to the annual revenue of a Charity. Organisations having an annual income below this Threshold will have lighter compliance requirements with respect to submission of returns / reports / permission etc. However, if irregularities are detected in their functioning, the organisations will be liable for legal and penal action.
   • The government should set up an Inclusive Committee which will comprehensively examine the issue of defining ‘Charity’ and ‘Charitable Purpose and suggest measures to “soften” charities-government relationship. particularly in tax matters.
2. Corporate Social Responsibility
   • When a community benefit project is taken up by a corporate entity, there should be some mutual consultation between the company and the local government so that there is no unnecessary overlap with other similar development programmes in the area.
   • Government should act as a facilitator and create an environment which encourages business and industry to take up projects and activities which are likely to have an impact on the quality of life of the local community.
3. Accreditation of Voluntary Organisations
   • There should be a system of accreditation / certification of voluntary organisations which seek funding from government agencies.
   • Government should take initiative to enact a law to set up an independent Body – National Accreditation Council – to take up this work.
4. Regulation of Foreign Contribution: The Foreign Contribution (Regulation) Bill, 2006 needs to be amended to include inter-alia the following suggestions
   • There should be a fine balance between the purpose of the legislation on one side and smooth functioning of the voluntary sector on the other.
   • There should be a time limit for procedures falling under Section 11 (seeking registration or prior permission for receiving foreign contribution).
   • To facilitate
     • speedy disposal of registration
     • effective monitoring of their activities
     • proper scrutiny of returns filed by them, some of the functions under the Foreign Contribution Regulation Act should be decentralised and delegated to State Governments/District Administration.
   • Organisations receiving an annual foreign contribution equivalent to less than Rs.10.00 lakh in a year (the figure to be reviewed from time to time) should be exempted from registration and other reporting requirements of the law. They should be asked, instead, to file an annual return of the foreign contribution received by them and its utilisation at the end of the year.
   • The law may provide that they may be liable to be investigated, if there is a reasonable suspicion of suppression / misrepresentation of facts, and penal provisions of the law will be used against them in case violation is established.
5. Issues of Self-Help Group Movement
   • The role of the Government in the growth and development of the SHG movement should be that of a facilitator and promoter.
   • Since a large number of rural households in the North-Eastern States and Central-Eastern parts of the country (Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Orissa, Madhya Pradesh, Chhattisgarh and Rajasthan) do not have adequate access to formal sources of credit, a major thrust on the expansion of the SHG movement in these areas should be facilitated.
   • The SHG movement needs to be extended to urban and peri-urban areas
   • NABARD Act, may be amended suitably to bring urban /semi-urban areas under its refinance mandate.
   • Commercial Banks and NABARD in collaboration with the State Government need to continuously innovate and design new financial products for these groups.
   • There should be a planned effort to establish Regional Rural Banks networks in the 87 districts of the country which currently do not have RRB presence.
   • Special steps should be taken for training / capacity building of government functionaries so that they develop a positive attitude and treat the poor and marginalized as viable and responsible customers and as possible entrepreneurs.
   • Rural credit is often viewed as a potential Non-Performing Asset. There is need to educate government employees and Bank personnel in this regard.
   • Technology may be leveraged to reduce the cost of reaching out to the poorest of the poor.
   • In order to scale up the operations of the Rashtriya Mahila Kosh, its corpus should be enhanced substantially.
   • RMK’s geographical reach should be expanded to help quick processing of loan applications and effective monitoring of the sanctioned projects in far off areas.
   • The Micro Financial Sector (Development and Regulation) Bill, 2007 needs to be amended to include the following suggestions:
     • The scope of Micro-finance Services should be substantially widened.
     • The issue of interest rate charged by the MFIs should be left to the Regulatory Authority which is being created under the proposed Bill.
     • Micro-finance institutions covered under the proposed law should be kept out of the purview of the State laws on money-lending.
6. Separating Professional Education from Self-Regulatory Authorities:
   • Professional education should be taken away from the domain of the existing Regulatory Bodies and handed over to specially created agencies – one for each of the streams of higher/professional education.
   • The recommendations of the National Knowledge Commission regarding reforms in the structure, governance and functioning of Universities should be examined and implemented on priority. The process of appointment of Vice Chancellors should be free from direct or indirect interference of the government. Vice Chancellors should be given a fixed tenure and they should have adequate authority and flexibility to govern the Universities with the advice and consent of the Executive Council
   • There should be stronger ties between educational institutions in the public and private sectors through mechanisms such as exchange of faculty.
7. Continuing Professional Education: Every Professional Regulatory Body in coordination with the respective National Quality and Standards Council and Academic Institutions should conduct Continuing Professional Education programmes periodically for updation and skill enhancement of its members.
8. Ethical Education and Training: The Regulatory Authorities should also pay greater attention to conducting workshops, seminars and training programmes on such issues.
9. Accountability and Parliamentary Oversight: The laws governing the Self-Regulatory Authorities should have a provision under which the Regulatory Authority should be required to present an Annual Report to the Parliament for scrutiny.
10. Cooperatives; Constitutional Context: An Article should be added to Part-IV of the Constitution in the form of 43B where the State should be made responsible for making such laws that will ensure autonomous, democratic, member driven and professional cooperative institutions.
    • Article 43B: Empowerment of Co-operatives: “The State shall endeavour to secure by suitable legislation or economic organisation or any other way autonomous, democratic, member driven and professional cooperative institutions in different areas of economic activity particularly those relating to agriculture”
    • The Commission endorses the amendments suggested by the National Advisory Council and feels that this coupled with the amendment suggested in the Directive Principles would be a step in the right direction to make the cooperative institutions voluntary, democratic, professional, member-driven and member centric enterprises.
    • Accordingly, the following amendments may be made in the Constitution:
      • Under Article 19, 19(1)(h) may be added as follows: To form and run cooperatives based on principles of voluntary and open membership, democratic member control, member economic participation, and autonomous functioning free from State control.”
      • Article 19(4) should be amended as follows: Nothing in sub- clauses (c) and (h) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of [the sovereignty and integrity of India or] public order or morality, reasonable restrictions on the exercise of the right conferred by the said sub-clause”.
11. Cooperative Credit and Banking Institutions: The process of implementation of the revival package for Short-Term Rural Cooperative Credit Structure (STCCS) formulated on the basis of the Vaidyanathan Committee Report should be completed immediately.
    It consists of the following major steps:
    • The Banking Regulation Act, NABARD Act and the State Cooperative Societies Acts need to be suitably amended in order to improve the management/governance of cooperative credit institutions.
    • A model Cooperative Law needs to be enacted by the States. States which do not wish to pass the Model Act, should introduce a separate chapter on Agricultural and Rural Credit Societies containing the salient provisions of the Model Law in their existing Cooperative legislation.
    • Similar steps should be taken in a time-bound manner in respect of the recommendations of the same Committee on Long-Term Cooperative Credit Structure (LTCCS).