As far as paradoxes go, this one would top the list. India has more non-governmental organizations (NGOs) than most countries. Yet, they have been looked down upon with such severe distaste by successive governments, that their survival itself is at stake now.
An Emergency-time law of 1976, which should have ideally been done away with, the Foreign Contributions (Regulations) Act or FCRA that regulates funds by charity groups from abroad to NGOs in India, has just been given more teeth.
Nityanand Rai, Minister of State for Home, told Parliament in September that FCRA, 2020, which regulates the use of foreign funds by individuals and organisations, is “for national and internal security” and to “ensure that foreign funds do not dominate the political and social discourse in India.”
What the new rules mean
According to the 2020 government figures, there are a total of 49,859 registered NGOs with the FCRA. The amendment introduced last month is going to make life very difficult for them.
Activists claim it imposes restrictions that will force thousands of NGOs to shut down, dealing a body blow to the country’s once-flourishing civil society activism. It does not allow NGOs to share funds with any partner, individual or organization. The result is that small outfits may end up being unable to receive the donations on which they depend for survival.
Naturally, there is panic across India as thousands of local NGOs with millions of employees now face an uncertain future. At a media briefing, the Voluntary Action Network India (VANI) — an umbrella organization for Indian NGOs — questioned the timing of the new legislation, since many such small bodies have been involved in providing relief to millions across the country during the Covid-19 pandemic.
“This is the worst possible time to hamper civil society,” the director of Ashoka University’s Center for Social Impact and Philanthropy, Ingrid Srinath, said at the briefing. “Just when this country needs its entire civil society to work together with the private sector and the government to address the multiple problems that confront us — not only the health ones but the larger issues of where the economy is going and the many polarisations taking place on the ground,” he pointed out, adding that no wider consultation with the NGOs had taken place before the law was passed.
Amitabh Behar, the chief executive of Oxfam India, took to Twitter, calling the FCRA amendment a `devastating blow’. He also criticized the government’s double standards over the acceptance of foreign funds. “Red carpet welcome for foreign investments for businesses but stifling and squeezing the nonprofit sector by creating new hurdles for foreign aid which could help lift people out of poverty, ill health and illiteracy,” he said in a hard-hitting post.
Years of distrust
NGOs in India – thanks to a few bad apples – have always been looked upon with distrust by the political establishment. In 2015, the Supreme Court directed the CBI to collect information about NGOs and inform whether such organisations have filed balance sheets, including income-expenditure statements, to ascertain compliance with accountability norms.
This first-ever exercise to map NGOs— even outside of those receiving FCRA funding—came up with some staggering data: India had at least 31 lakh NGOs — more than double the number of schools in the country, 250 times the number of government hospitals, one NGO for 400 people as against one policeman for 709 people!
This information, indicating the relative status of education and healthcare infrastructure apart from policing, were facilitated by all states and Union Territories, where NGOs are listed under the Societies Registration Act. As it now turns out, this may not just have been an academic exercise in upgrading information about a sector that has, in many cases, rendered yeoman service in the country’s boondocks, where even government agencies find hard to reach, but one whose credentials needed to be put under the lens.
Distinguished Indian commentator, Gurcharan Das, wrote in his popular column in The Times of India: ``Its consequence, however, has been to create panic among lakhs of people in India and give a bad name to our country abroad. The latest amendment evokes images among international donors of the return of India’s dreaded licence raj. At one stroke, it has undone the good work of this government in the ‘ease of doing business’ as well as the positive atmosphere created by the recent agriculture and labour reforms.”
In other words, if an international foundation gives a grant to an Indian NGO, which has expertise in imparting sound lessons in reading and mathematics, which in turn selects ten outstanding local NGOs in the states to execute such a project, it would now be deemed illegal.
Das is quick to point out that many scientific research projects that depend on external funding face an uncertain future. India’s Green Revolution, he argues, wouldn’t have occurred under this FCRA amendment because the Rockefeller Foundation, which discovered the high yielding hybrid wheat in Mexico, wouldn’t have been able to sub-grant to implement the programme in the field!
The amendment has put a cap of 20 percent on overhead expenses. NGOs who run research institutions, schools, hospitals, and shelters aided by foreign funds will now have to prove that most of their employee expenses are non-administrative. It will certainly hamper the work of such organisations who work closely with state governments. The salaries of these employees will be termed as ‘overheads’ because their employees don’t interface with ‘beneficiaries’, but train government employees instead, who in turn deliver benefits to beneficiaries. Transparency advocator Venkatesh Nayak, believes that the government needs to apply this criterion to themselves first. ``If this comparative exercise is treated as valid, then data from other ministries can also be subjected to such studies, wherever they are available,” he contends.
To be sure, there’s little point in blaming only the BJP. In 2010, the Congress-led UPA government made the FCRA law harsher by extending its net to cover more civil society groups. In 2012, three NGOs lost their licence during the Kudankulam nuclear power plant protests.
In the past, CPM leader Prakash Karat, too, has taken a dim view of civil society activism. ``There has been an old debate in India about the role of foreign funded voluntary efforts, which graduated from developmental activities to `empowerment’ politics… Foreign-funded NGOs in the development-empowerment business are in fact facilitators of neo-liberal reforms and the imperialist strategy,” he said during the course of a speech back in 2004.
If these troubles were not enough, some procedural details introduced by the amendment are virtually unworkable. According to Nayak, all NGOs and associations registered under FCRA will now have to open or maintain an account at SBI New Delhi’s main branch at Sansad Marg for receiving foreign contributions. Trouble is 94% of such NGOs are registered outside Delhi. ``So opening a bank account at SBI Sansad Marg branch will be difficult for such an overwhelming number of registered bodies, which are spread across the country. The common sense principle behind enacting public laws is to provide a solution to a common problem not already addressed by existing laws, instead of creating newer problems,” he told this writer.
Nayak says that if the government wants to consolidate information in one place, it would be more convenient to allow registered NGOs to open accounts in the SBI branches closest to their offices, instead of making them rush to Delhi to open new bank accounts by the end of March 2021.
It sure looks a case of overregulation. All foreign remittances – to individuals, industry and civil society – are controlled by the finance ministry under Foreign Exchange Management Act. Why should charitable contributions be controlled by the home ministry under FCRA? Afterall, there is already the Financial Action Task Force (FATF) that investigates cases relating to terrorism.
It therefore makes sense that the government is examining a proposal to set up a regulator for charities receiving overseas funds. The proposals have been put up before the government based on a study conducted by the Central Economic Intelligence Bureau (CEIB), an arm of the Union Finance Ministry. Instead of burdening the Union Home Ministry, a division of labour seems like a more sensible approach.