NGOs vs. GoI: The Conflicts and Scrutinies

Last year, a much publicised leaked report by the Intelligence Bureau (IB) warned us that several NGOs, including Greenpeace India, were having a detrimental effect on India’s economic development. What does it mean? What’s the background story and milestone developments in this news segment?

NGOs vs. GoI: The Conflicts and Scrutinies

What is Extinction Rebellion?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : XR

Mains level : Climate activism

Delhi Police have named some environmental activists who are volunteers of a global environment movement seeking to call attention to the climate change emergency, in the Greta Thunberg ‘toolkit’ case.

Q.Climate activism is increasingly turning into a propaganda movement. Discuss.

What is Extinction Rebellion?

  • The global movement Extinction Rebellion also referred to as ‘XR’, describes itself as a decentralized, international and politically non-partisan movement using non-violent direct action and civil disobedience.
  • It aims to persuade governments to act justly on the Climate and Ecological Emergency.
  • XR was launched in the UK on October 31, 2018, as a response to a report by the United Nations Intergovernmental Panel on Climate Change (IPCC).
  • It had then declared that we only have 12 years to stop catastrophic climate change and our understanding that we have entered the 6th mass extinction event.
  • The movement now has a presence in 75 countries, including India.

What does XR want?

  • The group has “three core demands” of governments around the world.
  • It wants governments to “Tell the Truth”, to “Act Now”, and to “Go Beyond Politics” in order to confront the climate and ecological emergency that the world is faced with.
  • It wants them to communicate the urgency to bring change, and reduce greenhouse gas emissions to net-zero by 2025.
  • XR seeks to “rebel”, and asks groups to “self-organise”, without the need for anyone’s permission, to come up with collective action plans as long as they adhere to the group’s core principles and values.

What activities have XR done so far?

  • The group had announced a “Declaration of Rebellion” at launch, involving a public act of civil disobedience in London, demanding that the government reduce carbon emission to zero by 2025.
  • The eventual plan was to coordinate actions in other countries and to engage in an “International Rebellion” in March 2019.
  • The XR global website, however, states that the movement is “strictly non-violent”, and that they are “reluctant law-breakers”.
  • In April 2019, Greta Thunberg, the teenage Swedish climate activist, lent her support to the group by speaking to its members in London.

XR and India

  • The movement claims to have been inspired by 15 major civil disobedience movements around the world, including, apart from Women’s Suffrage and the Arab Spring, India’s struggle for Independence.
  • It refers to Mahatma Gandhi’s Salt March in 1930.
  • XR’s website says there are 19 groups in the country, including in the cities of Mumbai, Pune, Delhi, Hyderabad, Bengaluru, Kolkata, and Chennai.

Recent events

  • One of the group’s early public events was a “die-in” protest organised at Bandra Reclamation in Mumbai in October 2019.
  • Participants at “die-in” protests lie on the ground, pretending to be dead.
  • Since the city was already seeing protests against the felling of trees at Aarey Colony for the Metro crashed, police did not grant permission for the “die-in” protest.

NGOs vs. GoI: The Conflicts and Scrutinies

What are Social Stock Exchanges?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Social stock exchange

Mains level : NGO/NPO and their financing solutions

The Economic Survey 2021 has backed setting up of Social Stock Exchange in India.

Q. What are Social Stock Exchanges? Discuss how it will help finance social enterprises in India.

What are Social Stock Exchanges (SSEs)?

  • An SSE is a platform which allows investors to buy shares in social enterprises vetted by an official exchange.
  • The Union Budget 2019 proposed setting up of first of its kind SSE in India.
  • The SSE will function as a common platform where social enterprises can raise funds from the public.
  • It will function on the lines of major stock exchanges like BSE and NSE. However, the purpose of the Social Stock Exchange will be different – not profit, but social welfare.
  • Under the regulatory ambit of SEBI, a listing of social enterprises and voluntary organizations will be undertaken so that they can raise capital as equity, debt or as units like a mutual fund.

Why SSEs?

  • India needs massive investments in the coming years to be able to meet the human development goals identified by global bodies like the UN.
  • This can’t be done through government expenditure alone. Private enterprises working in the social sector also need to step up their activities.
  • Currently, social enterprises are very active in India. However, they face challenges in raising funds.
  • One of the biggest hurdles they face is, apparently, the lack of trust from common investors.

Benefits

  • There is a great opportunity to unlock funds from donors, philanthropic foundations and CSR spenders, in the form of zero-coupon zero principal bonds. These bonds will be listed on the SSE.
  • At first, the SSE could become a repository of social enterprises and impact investors.
  • The registration could be done through a standard process.
  • The SEs could be categorized into different stages such as as- Idea, growth stage and likewise, investors can also be grouped based on the type of investment.

Development so far

  • The Economic Survey 2021 highlighted the concept of setting up a social stock exchange (SSE) in India.
  • It will be under the regulatory ambit of the Securities and Exchange Board of India (SEBI).
  • SEBI constituted a working group (WG) on social stock exchanges back in September 2019.
  • The WG has outlined its vision and made recommendations, which include the participation of NPOs and for-profit enterprises (FPE) on SSE subject to committing to minimum reporting requirements.

NGOs vs. GoI: The Conflicts and Scrutinies

Home Ministry amends FCRA rules

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : FCRA

The Ministry of Home Affairs (MHA) has relaxed FCRA norms for farmer, student, religious and other groups who are not directly aligned to any political party to receive foreign funds if the groups are not involved in “active politics”.

Must read:

What is Foreign Contribution (Regulation) Act, and how does it control donations?

What is the FCRA?

  • The Foreign Contribution Regulation Act (FCRA), 2010 regulates foreign donations and ensures that such contributions do not adversely affect the internal security of our country.
  • The Act, first enacted in 1976, was amended in the year 2010 when a slew of new measures was taken by the Union Home Ministry to regulate foreign donations. It was again amended in September this year.
  • It is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA.
  • The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

What are the new rules?

  • The new rule says- the organisations specified under clauses (v) and (vi) of sub-rule (1) shall be considered to be of political nature, if they participate in active politics or party politics, as the case may be.
  • The 2011 rules on said clauses dealt with “guidelines for the declaration of an organisation to be of a political nature, not being a political party”.
  • It said that the Central government could specify an organisation as that of political nature based on six criteria.

Defining ‘Political group’

  • Clause V of Rule 3 (FCRA 2011) qualified a political group as, “organisations of farmers, workers, students, youths based on caste, community, religion, language or otherwise, which is not directly aligned to any political party, but whose objectives or activities, include steps towards advancement of political interests of such groups.
  • The activities include: habitually engagement in or employ common methods of political action like rasta roko, jail bharo, rail roko, bandh or hartal in support of public causes.

Why such a move?

  • As per the FCRA, members of legislatures, political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
  • The new rules make new FCRA registrations more stringent.

NGOs vs. GoI: The Conflicts and Scrutinies

Foreign Contribution (Regulation) Act (FCRA)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : FCRA

The Ministry of Home Affairs (MHA) has asked all NGOs seeking foreign donations to open a designated FCRA account at the State Bank of India’s New Delhi branch.

What is the FCRA?

  • The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
  • First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations.
  • The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA.
  • The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

What happens once registered?

  • Registered associations can receive a foreign contribution for social, educational, religious, economic and cultural purposes.
  • Filing of annual returns, on the lines of Income Tax, is compulsory.
  • In 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds.
  • It ruled that it is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.
  • It also said all such NGOs would have to operate accounts in either nationalized or private banks which have core banking facilities to allow security agencies access on a real-time basis.

Who cannot receive foreign donations?

  • Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
  • However, in 2017 the MHA amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

How else can receive foreign funding?

  • The other way to receive foreign contributions is by applying for prior permission.
  • It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects.
  • But the association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956.
  • A letter of commitment from the foreign donor specifying the amount and purpose is also required.

When is a registration suspended or cancelled?

  • The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days.
  • Until a decision is taken, the association cannot receive any fresh donation and cannot utilise more than 25% of the amount available in the designated bank account without the permission of the MHA.
  • The MHA can cancel the registration of an organisation which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.

NGOs vs. GoI: The Conflicts and Scrutinies

Exploring the idea of Social Stock Exchange

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Social Stock Exchange

Mains level : Paper 2- Social Stock Exchange

Context

  • The Securities and Exchange Board’s (SEBI) working group has submitted its report with recommendations regarding the structure, mechanisms, and regulatory framework for the proposed Social Stock Exchange (SSE).

What are Social Stock Exchanges (SSEs)?

  • An SSE is a platform which allows investors to buy shares in social enterprises vetted by an official exchange.
  • The Union Budget 2019 proposed setting up of first of its kind SSE in India.
  • The SSE will function as a common platform where social enterprises can raise funds from the public.
  • It will function on the lines of major stock exchanges like BSE and NSE. However, the purpose of the Social Stock Exchange will be different – not profit, but social welfare.
  • Under the regulatory ambit of SEBI, a listing of social enterprises and voluntary organizations will be undertaken so that they can raise capital as equity, debt or as units like a mutual fund.

Issues with the idea of Social Stock Exchange

  • SSE exists in one form or another in UK, Singapore, South Africa, Canada and Brazil, but it is yet to take off in any country.
  • It has been an instrument focussed on social enterprises with rather poor results.
  • The proposed SSE in our country could have been an interesting innovation if it was first.
  • Replicating an experiment from elsewhere in an extremely complex environment of endemic poverty, high inequality and regional variation does not seem a reasoned decision.
  • It is therefore important to analyse why it has been pushed as a key policy.

Why civil society is sceptical

  • The 2020-21 Union Budget says that not-for-profit organisations will need to apply every five years for income tax registration to ascertain their charitable status.
  • They will also need to renew their 80(G) certificate that provides tax relief to their donors.
  • The not-for-profit sector would not be able to survive without the tax-exempt charitable status.
  • These restrictions will open the gates to corruption and bullying by the tax and government bureaucracy.
  • The SEBI working group was constituted of business leaders, government and SEBI officials with a token representative from civil society.
  • Composition of the committee reflects the real intent of the SSE, which is to create instruments for market to enter the social sector.
  • However, the way the exchange is envisioned makes it clear that the interests of the private sector are guiding the idea of SSE.

Will the entry of private sector benefit social sector

  • The proponents of the SSE argue that it would help set standards and a performance matrix for the social sector.
  • SSE is also expected to help bench-marking of sector actors (credibility checks), organise information and data, help in impact assessments, and do capacity building for the sector.

Solving complex social problems

  • Poverty or injustice are essentially systemic and political questions that need multi-pronged dynamic engagement.
  • Developing set standards of impact assessment and performance matrix has the risk of privileging only one approach to the developmental challenges at hand.
  • The SSE would create more intermediaries and benefit larger organisations.
  • More than 99 per cent of the three million NGOs in the country are in the small category and will be untouched by the SSE.

Conclusion

The core business of the SSE is to strengthen the social sector and bring new resources to it, SEBI for sure itself would admit that it is not the appropriate anchor.

NGOs vs. GoI: The Conflicts and Scrutinies

Foreign Contribution (Regulation) Amendment Bill, 2020

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : FCRA

The Centre is set to amend the Foreign Contribution (Regulation) Act and has proposed to make Aadhaar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO or an association eligible to receive foreign donations.

What are the news Amendments?

(1) Prohibition to accept foreign contribution:

  • Under the Act, certain persons are prohibited to accept any foreign contribution.
  • These include election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others.
  • The Bill adds public servants (as defined under the Indian Penal Code) to this list.
  • Public servants include any person who is in service or pay of the government or remunerated by the government for the performance of any public duty.

(2) Transfer of foreign contribution:

  • Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution).
  • The Bill amends this to prohibit the transfer of foreign contribution to any other person. The term ‘person’ under the Act includes an individual, an association, or a registered company.

(3) Aadhaar for registration:

  • The Act states that a person may accept foreign contribution if they have: (i) obtained a certificate of registration from central government, or (ii) not registered, but obtained prior permission from the government to accept foreign contribution.
  • Any person seeking registration (or renewal of such registration) or prior permission for receiving the foreign contribution must make an application to the central government in the prescribed manner.
  • The Bill adds that any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document.
  • In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.

(4) FCRA account:

  • Under the Act, a registered person must accept foreign contribution only in a single branch of a scheduled bank specified by them.
  • However, they may open more accounts in other banks for utilization of the contribution.
  • The Bill amends this to state that foreign contribution must be received only in an account designated by the bank as “FCRA account” in such branch of the State Bank of India, New Delhi, as notified by the central government.
  • No funds other than the foreign contribution should be received or deposited in this account.

(5) Restriction in the utilization of foreign contribution:

  • Under the Act, if a person accepting foreign contribution is found guilty of violating any provisions of the Act or the unutilized or unreceived foreign contribution may be utilized or received, only with the prior approval of the central government.
  • This amendment Bill also seeks to prohibit the transfer of FCRA funds to other persons or organisations.
  • The Bill adds that the government may also restrict usage of unutilized foreign contribution for persons who have been granted prior permission to receive such contribution.
  • This may be done if, based on a summary inquiry, and pending any further inquiry, the government believes that such a person has contravened provisions of the Act.

(6) Renewal of license:

  • Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration.
  • The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application: (i) is not fictitious or benami, (ii) has not been prosecuted or convicted for creating communal tension and (iii) has not been found guilty of diversion or misutilisation of funds, among others conditions.

(7) Reduction in use of foreign contribution for administrative purposes:

  • Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received.
  • Further, they must not use more than 50% of the contribution to meeting administrative expenses. The Bill reduces this limit to 20%.

(8) Surrender of certificate:

  • The Bill adds a provision allowing the central government to permit a person to surrender their registration certificate.
  • The government may do so if, post an inquiry, it is satisfied that such person has not contravened any provisions of the Act, and the management of its foreign contribution (and related assets) has been vested in an authority prescribed by the government.

(9) Suspension of registration:

  • Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days.
  • The Bill adds that such suspension may be extended up to an additional 180 days.

Significance of the amendment

1.Prevent misuse:

  • The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the FCRA 2010.
  • Recently, the Union Home Ministry has suspended licenses of the six (NGOs) who were alleged to have used foreign contributions for religious conversion.

2.Strengthen National security

  • Many persons were not adhering to statutory compliances such as submission of annual returns and maintenance of proper accounts.
  • Such a situation could have adversely affected the internal security of the country.

3.Transparency and accountability

  • The new Bill aims to enhance transparency and accountability in the receipt and utilisation of foreign contributions and facilitating the genuine non-governmental organisations or associations who are working for the welfare of society.

Criticism of the FCRA Bill, 2020

  • The legislation may be used to target political opponents and religious minorities.
  • Effects NGO Functioning: Due to the 20% cap, many NGOs will shut shop and many people will become jobless.
  • Inconsistency: On one hand the government invites foreign funds, but when such funds come for educational and charitable purposes, it is prevented.
  • High compliance rate: According to the GoI’s FCRA dashboard, there are 22,447 active FCRA registrations in India today. In 2018-19, 21,915 annual returns were filed – a compliance rate of 97.6%.
  • Double standards: PM CARES fund had received exemptions from complying with FCRA provisions when it is headed by Union cabinet ministers and administered by PMO officials.
  • Licence-Raj on NGOs: The Bill assumes that all NGOs receiving foreign grants are guilty and thus makes Aadhar of office bearers as mandatory requirement.
  • Bureaucratic Discretion: There is a thin line between enforcing transparency and using rules to allow official interference and harassment in the sector. Much of the present bill crosses that line and introduces a questionable degree of micro-management.

Way Forward

  • NGOs are helpful in implementing government schemes at the grassroots. They fill the gaps, where the government fails to do their jobs.
  • The government must stick to the ancient Indian ethos of Vasudhaiva Kutumbakam as the framework for its global engagement and should not act with vendetta against the NGOs who criticize its working.
  • Seamless sharing of ideas and resources across national boundaries is essential to the functioning of a global community, and should not be discouraged unless there is reason to believe the funds are being used to aid illegal activities.

NGOs vs. GoI: The Conflicts and Scrutinies

What is Foreign Contribution (Regulation) Act, and how does it control donations?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : FCRA

The licences of 13 non-governmental organisations (NGOs) have been suspended under the Foreign Contribution (Regulation) Act (FCRA), 2010, this year.

What is the FCRA?

  • The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
  • First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations.
  • The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA.
  • The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

What happens once registered?

  • Registered associations can receive a foreign contribution for social, educational, religious, economic and cultural purposes.
  • Filing of annual returns, on the lines of Income Tax, is compulsory.
  • In 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds.
  • It ruled that it is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.
  • It also said all such NGOs would have to operate accounts in either nationalized or private banks which have core banking facilities to allow security agencies access on a real-time basis.

Who cannot receive foreign donations?

  • Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
  • However, in 2017 the MHA amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

How else can receive foreign funding?

  • The other way to receive foreign contributions is by applying for prior permission.
  • It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects.
  • But the association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956.
  • A letter of commitment from the foreign donor specifying the amount and purpose is also required.

When is a registration suspended or cancelled?

  • The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days.
  • Until a decision is taken, the association cannot receive any fresh donation and cannot utilise more than 25% of the amount available in the designated bank account without the permission of the MHA.
  • The MHA can cancel the registration of an organisation which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.

Also read:

Registration under Foreign Contribution Regulation Act (FCRA)

NGOs vs. GoI: The Conflicts and Scrutinies

Registration under Foreign Contribution Regulation Act (FCRA)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : Money laundering and terror financing

The Union Home Ministry has granted FCRA registration to the famous Gurdwara Harmandir Sahib, or the Golden Temple, in Amritsar, enabling it to receive foreign donations.

Foreign Contribution Regulation Act

  • The Foreign Contribution (Regulation) Act, 2010 is an act to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies
  • It prohibits acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto
  • The central government has the power to prohibit any persons or organizations from accepting foreign contribution or hospitality if it is determined that such acceptance would likely “affect prejudicially”

(i) the sovereignty and integrity of India,

(ii) public interest,

(iii) freedom or fairness of election to any legislature,

(iv) friendly relations with any foreign State, or

(v) harmony between religious, racial, social, linguistic or regional groups, castes or communities

Premise for the FCRA

  • Government of India enacted the Foreign Contribution (Regulation) Act (FCRA) in the year 1976 with an objective of regulating the acceptance and utilization of foreign contribution.
  • Any association, non-government organisation (NGO) or registered society requires FCRA registration to receive foreign donations for specified purposes.
  • The act was majorly modified in 2010 with several amendments because many NGOs were found using illegal use of foreign funding.

NGOs vs. GoI: The Conflicts and Scrutinies

Foreign Funding of Public Organizations

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : Issues with foreign funding

The Central government cannot brand an organisation ‘political’ and deprive it of its right to receive foreign funds for using “legitimate forms of dissent” like bandh, hartal, road roko or jail ‘bharo’ to aid a public cause, the Supreme Court held.

Why such Judgement?

  • The verdict came on a petition filed by Indian Social Action Forum challenging certain provisions of the Foreign Contribution Regulation Act (FCRA), 2010 and the Foreign Contribution (Regulation) Rules of 2011.
  • Both of these confer the Centre with “unguided and uncanalised power” to brand organisations ‘political’ and shut down their access to foreign funds.
  • The FCRA 2010 prohibited acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest, it the court said.
  • The FCRA and its Rules allowed the government to indulge in its whims and fancies to deprive organisations of their foreign contributions.
  • The terms used in the statute like ‘political objectives’, ‘political activities’, ‘political interests’ and ‘political action’ had no clarity.

Issues with FCRA

  • The provisions under challenge before the court included Section 5 (1) of the FCRA.
  • This provision allowed the Centre a free hand to decide whether a seemingly non-political organisation was actually political in nature. INSAF argued that Section 5(1) was vague and thus unconstitutional.
  • The Delhi High Court, which INSAF approached first, said the provision was “expansive” and not vague. The Supreme Court agreed with the High Court.
  • The next provision under the microscope was Section 5(4) of the FCRA.
  • INSAF said the provision did not exactly identify the authority before which an organisation could represent its grievance. But the apex court dismissed this contention.
  • INSAF had also challenged the various clauses of Rule 3 of the 2011 Rules. This provision identified the various types of ‘political’ activities for which/organisations whose foreign funding could be stopped by the government.

Foreign funds are permissible for non-political organizations

  • Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature.
  • But the foreign funding pipeline could be cut if an organisation took recourse to these forms of protest to score a political goal, the court said.
  • It struck a similar balance in the cases of organisations of farmers, workers, students, youth based on caste, community, religion, language, etc.
  • It said their foreign funding could continue as long as these organisations worked for the “social and political welfare of society” and not to further “political interests”.

What about Political Organizations?

  • The court wholesomely agreed that organisations with avowed political objectives in its memorandum of association or bye laws cannot be permitted access to foreign funds.
  • Such organisations were clearly of a “political nature,” it concluded.

Why regulate foreign funding?

  • The purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds.
  • Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected.
  • On the other hand, such of those voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions.

Back2Basics

FCRA

  • Government of India enacted the Foreign Contribution (Regulation) Act (FCRA) in the year 1976 with an objective of regulating the acceptance and utilization of foreign contribution.
  • The act was majorly modified in 2010 with several amendments because many NGOs were found using illegal use of foreign funding.
  • It is a consolidating act whose scope is to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies.
  • It aims to prohibit funding for any activities detrimental to the national interest and for matters connected therewith.
  • In 2016 license of about 20,000 NGOs were cancelled after reviewing their work.

NGOs vs. GoI: The Conflicts and Scrutinies

[op-ed snap] Why 2005 declaration on synergy between government and NGOs is still relevant

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : NGO - reforms needed

Context

The idea of NGOs started in the 90s. It held that apart from the government agencies, corporates, the cooperative sector, and other citizens could get together for common developmental causes. This is loosely called the Fifth Estate.

Role of NGOs

  • The development required technology, capital, and other resources. 
  • But above all, the motivation and capability of the concerned people to utilise their resources in an efficient, equitable, and sustainable manner. 
  • The decade of the 90s saw sweeping changes in the way rural development — particularly matters relating to natural resources. 
  • Rural communities were required to prepare and implement micro plans appropriate to local conditions and needs. Joint Forest Management (1990), watershed development (1995), participatory irrigation management (1997) and Swajaldhara (2003) are good examples.
  • Those working for participatory management of natural resources were hoping to strengthen and carry forward the participatory approach in 2000-2001 at the time of the formulation of the Tenth Plan. 
  • The trends in the 10th Five Year Plan point to distortions and reversals of the healthy trends of the 90s. 

The decision at Bhopal – 8 principles

  • The problems called for a national-level meeting in 2005 at Bhopal. It was attended by leaders from NGO community, academics and policymakers from various parts of India. 
  • It prepared eight declarations based on eight principles:
    • The centrality of community-based organisations (CBOs)
    • Equity
    • Decentralisation.
    • Need of a facilitating agency
    • Monitoring and evaluation
    • Training and software
    • Sustained momentum of development 
    • Organisational restructuring

Challenges facing NGOs

  • There were conflicts with government and corporate entities — all those who had “sanctioned budgets”. 
  • There was corruption and no one to lead the well meaning when problems arose. 

Way ahead

If we decide to plan again with the large number of new schemes that were declared after planning was abolished, we must reinvent these principles.

NGOs vs. GoI: The Conflicts and Scrutinies

New FCRA rules

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCRA

Mains level : Preventing money laundering

  • The Union home ministry has revised its rules on NGOs receiving foreign funding.

New FCRA Rules

  • In a notification, the ministry announced the changes in the Foreign Contribution (Regulation) Rules, 2011, which include that individuals need not declare personal gifts to the tune of ₹1 lakh anymore.
  • Earlier, gifts worth more than ₹25,000 were required to be declared.
  • The office bearers, key functionaries and members of the organizations will have to declare that they are neither prosecuted nor convicted of religious conversion nor charged with sedition.
  • It is also mandatory for office bearers and key functionaries and members to certify that they have not been “prosecuted or convicted” for “conversion” from one faith to another and for creating “communal tension and disharmony”.
  • Earlier, as per the FCRA 2010, only applicants such as directors who sought permission to receive foreign funds were required to make such a declaration.
  • Now, every member of an NGO must, under oath, through an affidavit, declare that they have never been involved in diverting foreign funds or “sedition” or “advocating violent means”.

About FCRA

  • Government of India enacted the Foreign Contribution (Regulation) Act (FCRA) in the year 1976 with an objective of regulating the acceptance and utilization of foreign contribution.
  • The act was majorly modified in 2010 with several amendments because many NGOs were found using illegal use of foreign funding.
  • It is a consolidating act whose scope is to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies.
  • It aims to prohibit funding for any activities detrimental to the national interest and for matters connected therewith.
  • In 2016 license of about 20,000 NGOs were cancelled after reviewing their work.

NGOs vs. GoI: The Conflicts and Scrutinies

[op-ed snap] There’s a hole in the data

Note4Students

Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of India’s data regime.

Mains level: The news-card analyses issues and challenges with India’s data regime, in a brief manner.


Context

  • The credibility of India’s data systems is under serious threat with the recent controversy over the employment data of the National Sample Survey.

Issue

  • While the Census of India and the National Sample Survey Organisation (NSSO) have a good reputation, when it comes to data related to the social sector (health, education, nutrition) the situation has been deficient on numerous counts.
  1. The information collected is not available in real time or even annually
  • The NSSO collects data through specific rounds (health expenditure, debt etc.) which don’t have a fixed cycle unlike the consumption expenditure surveys.
  • The Census collects data once in 10 years.
  • Budget allocations follow an annual cycle and policy pronouncements are not dovetailed to the years for which data is available.
  • This raises important questions about the basis on which policies and plans are made.

Case of malnutrition and learning levels

  • In the case of malnutrition, which is a problem needing urgent solutions, there was no independent data telling us what the trends are for a long time.
  • The National Family Health Survey (NFHS-4) report came out in 2017 after a gap of over 10 years (NFHS-3 was in 2006).
  • In the interim, major initiatives were planned for the eradication of malnutrition without any inkling of the situation on the ground or how it was changing.
  • Similarly, data on learning levels was not collected consistently by the government till 2017.
  • It is not known when the next round will be held or how long it will take for the data to be made available.

2. Inconsistencies in definitions and sampling frames

  • There are inconsistencies in definitions and sampling frames across data sources and across time in the same data source.
  • For instance, questions posed by the NSS for obtaining information on out-of-school children vary dramatically from those posed by the Census.
  • As a result, the two arrive at vastly different numbers.
  • Similarly, in the case of malnutrition data, there have been changes in the definitions used by NFHS across different rounds that make comparisons over time difficult.
  • Periodicity of data collection also varies across sources, furthering difficulty in validation.
  • Data validation plays an important part in improving the quality of data collected and ensuring authenticity, without which departments are basically shooting in the dark.

3. Data collected in these surveys is not geared towards policy or planning

  • The education rounds of NSS are part of the survey on social consumption, which in turn is for the purpose of making an assessment of the benefits derived by various sections of society from public expenditure incurred by the government.
  • It provides no information on how the education system is functioning.
  • As a result, several important indicators that would be of interest for planning or to the people, do not even figure in them.
  • For instance, the different categories of teachers or their salaries is a not a data point in any data-set on education.

Challenges

(a) Data suffer from gaps in information

  • In the absence of regular large-scale survey data, what is available is the registry data collected by departments and ministries for monitoring of programmes.
  • Unfortunately, these too suffer from gaps in information and are rarely used for programmatic purposes.
  • At most, they are part of an accounting exercise.
  • For instance, school surveys by the MHRD collect information on broad indicators of infrastructure and teacher availability (only two categories, whereas multiple exist) and student enrolment (but not attendance) and distribution of incentives.
  • These take stock of the provisioning in schools, showcasing administrative efforts, but not functioning of the education system or real changes within it.

(b) Conflict of interest resulting from data being collected by people who are entrusted with ensuring outcomes

  • Thus, school data for District Information System for Education (DISE) is collected by school teachers, health workers fill in the information for Health Management Information System (HMIS), anganwadi workers provide nutrition data and so on.
  • This creates perverse incentives for them to hide the reality on the ground.
  • This came out starkly in a comparison (by N C Saxena) of monitoring data of ICDS, which showed severe malnutrition for the country at 0.4 per cent, whereas NFHS data for a comparable period showed it to be around 16 per cent.
  • Field studies show that anganwadi workers are often penalised by their superiors for reporting severe malnutrition.
  • Similarly, teachers fear losing their job if enrolment or attendance falls below a certain level.

(c) Data collection also suffers because it is not used in any meaningful manner

  • The anganwadi worker who fills numerous registers each month never receives any feedback on the data collected.
  • Cluster and Block Resource Persons in the education system routinely collect enormous amounts of information in multiple formats.
  • But no action is taken on it.
  • This lack of feedback acts as a huge disincentive to the data collectors reducing the quality of what they collect.
  • The shift to mobile reporting has not changed the situation on the ground as introduction of technology did not improve the feedback mechanism that continues to be a missing link.

Implications and Concerns

  • In effect, the state has failed to create capacities that can be devoted to developing and maintaining a timely, reliable and decentralised data regime.
  • This inadequacy pervades the system from top to bottom.
  • DISE has barely a handful of people manning the entire operation of developing and maintaining the official database for education.
  • At the sub-national level, they rely on data entry operators to collate and digitise data manually collected by teachers in complex formats.
  • There are no statisticians in the system and few inputs received from educationists.
  • Data in usable or useful form is unavailable at local levels, severely hampering ideas of transparency, accountability and decentralised planning.

Way Forward

  • The paucity and unreliability of government data has given rise to a plethora of non-government data sources in the social sectors, similar to Centre for Monitoring Indian Economy for industry and employment data.
  • In education, the Annual Status of Education Report and the India Human Development Survey are commonly used.
  • While these sources have been useful in highlighting neglected issues, it raises the question of data neutrality.
  • A large country of India’s complexity and growth should strengthen its own data regime to ensure independence and neutrality.
  • It will go a long way in ensuring that the country’s policies and plans are on track.
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