‘Carpet Bombing’ instead of ‘Surgical Strike’ on ‘foreign funded’ organisations

The most recent Foreign Contribution Regulation Amendment Bill 2020 was introduced in the Lok Sabha on Sunday, 20th September 2020. Till that afternoon no one seemed to have even a clue that this Bill was in the offing. The very next day it was passed by the Lok Sabha and on 23rd September by the Rajya Sabha. The Bill received the President’s Ascent on 28th September and by 29th September or in just over a weeks’ time, it was law.

Stealth operation

The entire operation was carried out by the government of India with the kind of speed, stealth and strategy that would put a cheetah to shame.

It would also seem that this entire exercise has been carried out to punish or put on the run just a handful of ‘foreign funded’ organisations. However, instead on launching a ‘surgical strike’ on these select few, the government of India decided instead to carpet bomb all the twenty thousand odd NGOs registered or having prior permission under FCRA 2010.

Are Foreign Contributions really a threat?

Significantly more foreign funds flow into India through Foreign Direct Investment (FDI) and through Foreign Institutional Investors (FIIs). However, these are regulated under a relatively softer and more friendly Foreign Exchange Management Act (FEMA).

In 2017-2018, Foreign Direct Investment in India was more than INR 277,000 crores (one crore = ten million rupees). In contrast, there were only approximately 25,000 active organisations registered under the FCRA receiving foreign contributions worth around INR 18,065 crores from foreign donors for various social, cultural, economic, educational and religious activities in 2016-2017.

It is ridiculous for anyone including the government of India to believe that 25,000 NGOs with aggregate receipts of INR 18,065 crores from foreign donors for various social, cultural, economic, educational and religious activities could be a “threat to national interest” or “affect prejudicially the sovereignty and integrity of India.”

Constitutional validity

Most, if not all these changes under the new Foreign Contribution Regulation Amendment Act 2020 can be challenged on grounds of constitutional validity or violation of fundamental rights.

Government is well within its rights to “Regulate” civil society organisations. However, it has absolutely no right to “control” or dictate which bank the FCRA account should be opened with, nor prevent one registered and compliant organization from contributing to another registered and compliant organization, nor control how much the cap on admin expenditure should be. What may or may not be spent on management related expenditure is strictly contractual between the donor and the recipient NGO and it is not for the government to determine that.

Every NGO/NPO/CSO is independent where matters concerning internal governance are concerned. Fines and penalties may be imposed for compounding certain irregularities such as not filing returns in time. NGOs may also be subject to random financial assessments by the regulatory authorities. However, ‘control’ instead of ‘regulating’ is unacceptable.

In our opinion there is no need to add new laws or amend existing laws or add more compliance requirements considering that the government has enough powers to “investigate” those it believes are not transparent enough through Comptroller Auditor General (CAG) and CBI agents.

Reward or Retribution?

As recently as in the month of May 2020 Mr. Amitabh Kant, CEO of NITI Aayog had acknowledged that “civil society, and voluntary and non-governmental organisations constitute the backbone of collective articulation of citizen interest in a democracy.

We suppose this amendment is the government of India’s idea of ‘Rewarding’ civil society (which supposedly “constitutes the backbone of collective articulation of citizen interest in a democracy”) by attempting to break the very backbone ofCSOs.

In February 2019, Prime Minister Narendra Modi, ahead of arriving in Vrindavan to serve meals to underprivileged school children as also to mark the serving of the third billionth meal by Akshaya Patra Foundation, had praised the efforts of NGOs towards eradicating hunger from the country.

Finance Minister Nirmala Sitharaman while presenting her first Budget in the Indian Parliament in the year 2019 began on a positive not by proposing to initiate steps towards creating an electronic fund-raising platform, a social stock exchange, under SEBI for listing social enterprises and volunteer organisations.

As recently as in June 2020, even the Supreme Court of India recognized the fact that though it is the responsibility of government to take care of migrant workers, the contribution and role played by non-governmental organisations (NGOs) “deserves all appreciation” for coming forward to help them by providing food, water and transport during the “difficult time” of COVID-19 pandemic.”

Punish all for acts of a few

What has led the government to impose such draconian changes under the law?

Is it to stifle organisations which are called non-governmental organisations simply because they are delivering what government should be providing without being the government and far more seamlessly and cost-effectively?

Is it in order to punish rights based and advocacy organisations? Is it to hound out of the country certain International agencies working on human rights or the environment? Is it in order to clip the wings of a particular foundation run by a certain political family in India?

If yes, why can’t the government put such organisations in a separate category and spare all other welfare-oriented, service delivery organisations the anxieties and grief that comes with every such amendment?

Why must the government of India throw the baby out with the bathwater, each and every time?

Know the difference

The voluntary sector in India is noted for its vibrancy, innovation and research-based advocacy. It has played an important role in supporting government as a partner in nation-building.

How difficulty is it for the government of India to understand or to realize that not all NPOs are advocacy organisations? Activist organizations constitute only a tiny segment of the overall sector.

Get the facts straight – most NPOs are service delivery organisations and are out to bring stability and not instability in the country. Most are delivering with private funds what government should be delivering with public (tax payers) funds. NPOs provide relief from poverty, education, medical relief and goes where no government or corporate agency cares or dares to go.

But this is not to say that activist organisations do not have a place in a country like India. They have a legitimate and rightful place in any good civil society.

The government often questions what “public good” CSOs do apart from voicing dissent. In our view, the government should understand and accept that “dissent” itself is “public good” in a democracy. Lobbying or advocacy is integral to democracy.

Flawed statistics

There is also a lot of loose-talk regarding the mushrooming growth of NGOs in India.

The Central Statistical Institute of India announced in about 2009 that there were 3.3 million NGOs registered in India or literally one NGO for every 400 Indian citizens. However, the Indian Income Tax Department estimates 180,000 organisations as registered u/s 12A (i.e. established for a ‘charitable purpose’ and therefore ‘tax exempt.’).

Even if we assume than an equal number of organisations are not registered with Income Tax for tax exemption, the figure would still be less than half a million.

What’s more, just about 25,000 organisations are eligible to receive foreign funds under the Foreign Contributions Regulation Act (FCRA) 2010.

Voluntary organisations contribute to the GDP

About twenty years ago the Johns Hopkins Comparative Nonprofit Sector Project conducted a detailed research study to understand the scope, structure, and role of the nonprofit sector in twenty countries, including India, using a common framework and approach.

Contrary to popular perceptions, as much as fifty-one per cent of the receipts were self-generated, and only thirty-six per cent came from the government as grants and loans, with a mere seven per cent from foreign sources.

The voluntary sector in India does not simply fill gaps in the government’s service delivery system. As this more than two decades old study indicates, the voluntary sector contributes to the country’s GDP and is a major provider of livelihood to millions.

Noshir H. Dadrawala


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