How India treats its NGOs

True democracies celebrate involvement of citizens, make consultation a habit

The report suggests that the activities of some not-for-profits account for a 2 to 3 per cent loss in the GDP. The report suggests that the activities of some not-for-profits account for a 2 to 3 per cent loss in the GDP. (Pradeep Yadav)
Written by Maja Daruwala | Published on:June 16, 2014 12:12 am


In a case of giving a dog a bad name and hanging him, the Intelligence Bureau (IB) has submitted a report damning foreign-funded NGOs for stalling development and giving to Western powers undue leverage over India. Notwithstanding that it is a confidential document, it has been widely reported in the press, though no official confirmation of its receipt has been made.

The report suggests that the activities of some not-for-profits account for a 2 to 3 per cent loss in the GDP. How the loss has been calculated is uncertain. Nor can we tell how this compares with, say, the losses incurred through environmental degradation, rampant corruption, crony capitalism or money stashed abroad. That aside, the report exploits a longstanding suspicion of NGOs and civil society organisations, a legacy of Prime Minister Indira Gandhi’s Emergency and her favourite defence for her failings, the covert “foreign hand”.

NGOs are legal entities, like companies and cooperatives. They are formed by like-minded individuals who come together to promote their ideas or products. The Constitution allows these collective activities under the right to associate and to follow one’s livelihood, as long as their aims and objectives are legal and non-violent. The right to associate isn’t limited to associating with fellow countrymen but extends to associating with like-minded groups all across the world. Just as companies do business with counterparts abroad, NGOs can receive funds and share aspirations across borders. There is nothing inherently wrong with that. Myriad laws require all associations to be transparent and report regularly. Each year, like everyone else, NGOs must provide audited accounts and submit to the discipline of the Income Tax Act, the Societies Registration Act and labour laws.

In fact, NGOs are unfairly overregulated. Every rule singles them out for extra restriction and scrutiny. In the 1990s, when the Foreign Exchange Regulation Act was repealed and the more liberal Foreign Exchange Management Act was brought in to benefit individuals and companies, NGOs were quite unjustifiably kept out of this liberalisation. An especially severe and more discretion-dependent regime was brought in under an inexplicably draconian Foreign Contribution Regulation Act, which allows for outright interference with internal management.

Licence raj forces NGOs to jump through hoops — they have to apply for fresh registration every five years, and it prohibits foreign funding for any activity dubbed “political” by the government and disallows the usual avenues of investment or equities so that they remain ever-dependent on charity. Despite scams and cheats, like Saradha, which have  brought misery to millions and have held back decades of development, the goal of working for profit alone is deemed naturally laudable, while associating for a cause is seen as meriting …continued »

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