ROLE OF NGOs IN INDIA

WHY IN NEWS:

• Amnesty International has been forced to shut down operations in India in Sept 2020 and lay off all staff after the Indian government froze its bank accounts.

BACKGROUND:

• The UN Department of Public Information (DPI) defines the NGO as “a not-for profit, voluntary citizen’s group that is organized on a local, national or international level to address issues in support of the public good.”
• Indian NGOs mainly comes under three segments:
  • Societies: Societies have to register under The Societies Registration Act,1860.
  • Trusts: Private trusts are registered under the central government’s Indian Trusts Act, 1882, and public ones are registered under the state legislation concerned.
  • Charitable companies: They are set up according to section 8 of the Companies Act, 2013. For charitable companies, the compliance requirements are high, as loans and advances are easily available to them compared to a trust or a society. They have to even pay Income tax under IT act 1961.

SIGNIFICANCE:

• Bridging the gap:
  • NGOs endeavour to plug gaps in the government’s programmes and reach out to sections of people often left untouched by state projects.
  • For example, providing aid to migrant workers in Covid-19 crisis.
• Role in participative governance:
  • Many civil society initiatives have contributed to some of the path-breaking laws in the country, including the Environmental Protection Act-1986, Right to Education Act-2009, Forests Rights Act-2006 and Right to Information Act-2005.
• Acting as a pressure group:
  • There are political NGOs that mobilise public opinion against government’s policies and actions.
  • To the extent such NGOs are able to educate the public and put pressure on public policy, they act as important pressure groups in a democracy.
  • They also mobilize and organize the poor to demand quality service and impose a community system to accountability on the performance of grassroots government functionaries.
• Human rights protection:
  • The contribution of NGOs to human rights and public awareness is significant in India.
  • The recognition of the rights of homosexuals and transgender people, for instance, would have been unimaginable without the sustained effort of civil society organisations.
  • NGOs such as Bandhua Mukti Morcha (BMM) was instrumental in tackling bonded labour in India
• Protecting dignity:
  • NGOs are also rendering great service in restoring dignity of the deprived and discriminated sections.
  • For example, NGOs such as CARE India works for underprivileged women and girls in rural areas
• Education:
  • The NGOs actively work for promoting education, particularly among weaker sections of the population
  • Many NGOs like Oxfam India, Save the Children etc in India work at the grass-root level to strengthen the education system and spread awareness about the importance of education

CHALLENGES:

• Lack of human resource:
  • There is a massive crunch of qualified and experienced development sector professionals in India.
• Lack of fund:
  • Many NGOs find it difficult to garner sufficient and continuous funding for their work.
  • While CSR partnerships offer a steady income, the majority of NGOs are excluded and for them, gaining access to appropriate donors is a major component of this challenge.
• The absence of strategic planning:
  • Many NGOs suffer from the lack of a cohesive, strategic plan that would facilitate success in their activities and mission.
  • This renders them unable to effectively raise and capitalise on financial support.
• Poor development approaches:
  • It is a common mindset for Indian NGOs to favour a “hardware” approach to development.
  • This focuses on building infrastructure and providing services instead of empowering people and institutions locally, which often have stronger impacts.
  • Resultantly, NGOs’ development approaches are not as flexible, sustainable and relevant to the community as they have the potential to be
• Lack of transparency:
  • India’s disproportionate number of NGOs and the sector’s lack of transparency and accountability is clearly an issue that needs reforms.
• Poor governance and networks:
  • Poor or disorganised networking is another major challenge, as it can cause duplicated efforts, time inefficiencies, conflicting strategies and an inability to learn from experience
  • NGOs in many cases fail to maintain a healthy relationship with various government agencies– local, state level and the central government.
  • NGOs are commonly viewed as ‘opposition to the government’
• Over-regulations:
  • Government regulations are misused to curb the voice of dissent. Politicians threaten NGOs of removing funds or removing their certification. Over-regulation of NGOs hinder their work and efficiency.
• Cultural hurdles:
  • NGOs are often seen as encroaching on centuries-old tradition and culture of the people, and lead to mass protest at times.
  • Ban of Jallikattu after a Public interest litigation filed by PETA is one such example.

NEED FOR REGULATIONS:

• Reduce corruption:
  • The operations or sources of funding of most NGOs are not available in the public domain.
  • This lack of transparency has resulted in abject corruption and misappropriation of funds among many Indian NGOs.
• Concerns over national security:
  • NGOs are a crucial bulwark of India’s vibrant civil society.
  • However, as pointed out by an Intelligence Bureau Report published in 2014, many NGOs, with support from international donors, were disrupting the developmental activities and even funding anti-national activities, thus endangering Indian interests.
• Prevent opaque operations:
  • In 2017, the CBI has informed that less than 10 per cent of registered NGOs filed their audited accounts. Also, NGOs, except those substantially financed by the government, are outside the purview of the RTI Act.
  • Hence, there should be measures to ensure transparency in the operation of NGOs. 
• Prevent money laundering:
  • Because of the positive public perception and Income tax benefits available to them, Indian NGOs are targeted for money laundering activities.
  • As a result, there is a growing tribe of NGOs called briefcase NGOs which exists only on paper and handle vast funds for laundering

REGULATIONS AND INITIATIVES:

• Foreign Contribution (Regulation) Act (FCRA), 2010     
  • It was enacted to ensure that foreign contribution is utilized for genuine activities without compromising on concerns for National Security.
  • It replaced the Foreign Contribution (Regulation) Act 1976.
  • The act provides a list of individuals prohibited from accepting any type of foreign contribution, such as candidates for election, members of any Legislature, political parties or their office-bearers, publishers of a registered newspaper, judges, government servants or employees of any public sector corporation etc.
  • The central government has the power to prohibit any persons or organisations from accepting foreign contribution or hospitality
  • Recent amendments:
    • There is now a capping of the administrative expenses of NGOs at 20% of their foreign donations.
    • The new amendment requires them to have a State Bank of India account at a Delhi Branch.
    • It also prohibits the transfer of grants received under FCRA to any other outfit.
    • It also gives sweeping powers to the Ministry of Home Affairs to cancel the FCRA certificate of an NGO.
    • It made legal for political parties to accept foreign aid through Indian subsidiaries.
    • Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days
• Foreign Exchange Management Act, 1999:
  • It aims to facilitate external trade and payments and promote the orderly development and maintenance of foreign exchange market in India.
  • There are certain NGOs which are registered under FEMA and they disburse foreign funds to various associations within the country
  • According to FEMA Act, these NGOs are regulated by Finance Ministry.
• A social stock exchange (SSE)
  • SSE as envisaged by a recent report by the SEBI enables Indian social enterprises to list their securities or other financial instruments, providing them with an avenue for raising capital for their operations and growth, and reducing their dependency on ad hoc funding like grants or donations.

SUGGESTIONS:

• Rating system:
  • There is a need for a rating system to be in place for NGOs which ranks them on the basis of the seriousness of their work and their openness to getting audited and scrutinized.
• Cooperation in government:
  • It is imperative to NGOs to maintain a healthy relationship with various government agencies – local, state-level and the Central Government.
  • It is an extremely wrong notion that in order to do their work, NGOs need to go against the government.
  • The truth is that NGOs need to liaison well with government entities and be a partner wherever needed.
• Effective utilization of technology:
  • Utilize technology in recording actual data of the social work.
  • This information is crucial for effective decision-making process and better transparent working.
• International collaboration:
  • NGOs in India must be supported to broaden their network beyond India’s territory and reach out the reputed Philanthropy platforms globally
• Monitoring:
  • There should be better coordination between Ministries of Home Affairs and Finance in terms of monitoring and regulating illicit and unaccounted funds.
  • NGOs are vehicles of development especially in rural areas.
• Participation:
  • Citizens today are keen to play an active role in processes that shape their lives.
  • It is important that their participation in democracy go beyond the voting and should include promotion of social justice, gender equity, inclusion etc. while working with NGOs.
• Improving governance:
  • Having a Board for governing NGO is one of the best ways to achieve good levels of governance.
  • Capacity building and training can help to provide crucial new skills. NGOs can more readily train staff and cultivate the necessary skills within the organisation to address challenges going forward.
• Funding:
  • Maintaining a good relationship with partners will be helpful in growing as an organisation.
  • NGOs with assets can use any surplus to help generate income. Renting out buildings, offering training, providing consultancy, creating and selling products and trading on their name.
• Cultural awareness:
  • NGO should try to know local cultures and should work in harmony with the communities.
  • They must make people aware of any discriminatory community practices and work with them, rather than going against the people.

PRACTICE QUESTION:

Q. “A regulatory mechanism to keep a watch on the financial activities of NGOs and voluntary organizations is the need of the hour”. Critically analyse.