Should the social sector get its own set of laws?
The one-size-fits-all approach under FCRA has put civil society at loggerheads with governments for decades
The Ice Skating Association of India, which promotes, develops and controls ice skating in the country, received ₹ 23.88 lakh in foreign funding in 2013-14, says the Ministry of Home Affairs (MHA) website.
It goes on to list all non-profits registered with it under the Foreign Contribution (Regulation) Act, 2010 or FCRA, and the funds they received.
For instance, Act Now for Harmony and Democracy (ANHAD), a Delhi-based non-profit working on communal harmony received ₹ 98 lakh, while six trusts and societies registered under the aegis of Don Bosco and working on issues ranging from skill development to drinking water received around ₹ 16.67 crore from sources outside the country.
However, since they all receive some form of foreign funding, they have to apply for a licence under the FCRA, the working of which is overseen by MHA.
So the MHA, whose principal responsibility is the maintenance of internal security and order, also keeps a tab on associations that range all the way from promoting and administering a sport to defending democracy and secularism.
Says Supreme Court advocate Sanjay Parikh, who represented Greenpeace India in the Delhi High Court in 2014 after the MHA blocked funds to the organization citing violations: “It is unjust to treat all kinds of societies, charities and non-profits on par because questions will be asked if the working style and financial flows are different.”
The situation gets even more complex when non-profits registered under different acts—all antiquated—come under one umbrella FCRA.
For decades, civil society has been at loggerheads with governments because of the challenges posed by this one-size-fits-all approach.
“How can the same law (FCRA) be used to govern a body like the Port Trust of India and a rights-based organization like National Foundation of India, which helps raise money for grass-roots organizations,” asks Biraj Patnaik of the Right to Food Campaign.
According to him, there is an urgent need to “re-work the legislative and regulatory frameworks for NGOs in India”.
For example, a “social” organization can be hauled up for printing pamphlets or organizing protests or talking about livelihoods.
On the other hand, the Ice Skating Association, also a non-profit, but minus the “social” tag, can carry out similar activities without drawing official notice. So even though both fall under the same law, it is up to an MHA official or the political party in power at the centre to decide which activity to label anti-national and which not to, he says.
Venkatesh Nayak of the Commonwealth Human Rights Initiative (CHRI) says, “This has made operations restrictive as a licence makes certain kinds of non-profits dependent on the whims of MHA and has given rise to a licence raj of sorts.”
CHRI works on the right to information, prison reforms, police reforms and other human rights-related issues.
In the present environment of government distrust vis-a-vis non-profits working for social causes and receiving foreign funding, some say a separate law to govern the sector might help while others feel a unified law on the lines of the Foreign Exchange Management Act (Fema), 1999 is the way to go.
Some headway on redefining non-profit and civil society organizations was made in 2007, when the Planning Commission of India (reborn as NITI Aayog in 2014) came out with a draft national policy document on the voluntary sector.
The document defined voluntary organizations, suggested the creation of a comprehensive database, an enabling environment for these organizations to function, and ways in which they could adopt transparent and accountable systems of governance and management.
Unfortunately, after 2007, this document has not been revisited. With the dissolution of the Planning Commission, former members who worked on the document, and now unwilling to be named, say it is up to the government of the day to take the matter forward.
Says Patnaik, “The current framework makes the MHA the de-facto line ministry for all development organizations seeking funding from outside. The MHA can only work through a punitive mindset. While this would work best in North Korea or Russia, it is pertinent to ask if Indian democracy cannot come up with a more enabling set-up to deal with civil society organizations.”
M.R. Madhavan, president and co-founder of PRS Legislative Research, a non-profit working on policy research, believes FCRA is an irrelevant act.
“The best way to gauge a law is by answering the question whether the law serves the main purpose it was framed for,” he says.
The purpose of FCRA is to monitor foreign funds coming into the country for non-profits. “If I want to receive money from abroad, as a non-profit, I can easily do so by both legal and illegal channels. For the former, I just have to proffer a different title like consultancy, software export or some such, for which I will be paid but am not required to report under FCRA,” explains Madhavan. According to him, this loophole circumvents the main purpose of FCRA, rendering the act ineffective and futile. “An ineffective law is as good as no law,” he adds.
He is a strong proponent of scrapping FCRA and replacing it with a law like Fema, which will apply equally to all entities—both NGOs and businesses—engaged in foreign transactions.
Pointing out the duplicity in the current government’s stand, Dunu Roy of Hazard Centre—a not-for-profit working with the urban poor in Delhi—asks, “Foreign money coming in for commercial purposes is not deemed harmful to the interests of the nation but funds for the social sector are?”
According to him, the law should be equal for all: governing commercial money under Fema and charitable money under FCRA has created an inequality.
Citing the frequently-made charge of foreign money influencing the agendas of NGOs, Roy says, “It is incorrect to say donors call all the shots because each organization receiving money has its own identity and as long as this is not in conflict with the constitutional framework of India, there will be no conflict with national interest.”
But some still defend FCRA and believe the problem lies not in the law but in the way it is applied.
Sanjay Patra, a chartered accountant who heads the Financial Management Services Foundation, which helps NGOs with accounts, filing returns and capacity building, says: “The challenge with FCRA is the implementation and shortage of manpower within the government, not with the legal provisions.”
The facts bear him out: Overseeing 40,000-plus organizations spread across the country is a single sub-division in the MHA in Delhi, headed by one joint secretary, who in turn has two deputy secretaries—one looking at registrations and the other monitoring the registered agencies—along with support staff.
Mint’s requests to meet with joint secretary G.K. Dwivedi and the deputy secretaries went unanswered.
Whether or not they agree on the need for separate laws, civil society members speak in one voice when they demand an “enabling environment” and scope for “engagement” with the government.
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First Published:15 Jun 2015, 02:10 PM IST
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