The Foreign Contribution (Regulation) Amendment Bill, 2020, which was passed by the Rajya Sabha on Wednesday, has to be understood in a political context. The message is loud and clear: a single narrative being crafted in India and any challenge to power is seen with suspicion and crushed with brute force. Civil society, which believes that one of its primary roles is to hold power to account and to undertake non-party political action in favor of the marginalised and disempowered, needs to fall in line. Civil society can exist only if it is willing to play service delivery roles – or it should perish.

The legislation, which lays down conditions under which civil society organisations can receive funds from abroad, had been passed by the Lok Sabha on Monday. It will have far-reaching consequences on the fields of education, health, people’s livelihoods, gender justice and indeed democracy in India.

Depending on one’s vantage point, the Bill could be termed a draconian amendment of a deeply repressive law, or – in its most charitable assessment – as a sloppy piece of legislation that has failed to have undertaken even a basic analysis of the working of the field that it wants to govern. While acknowledging the huge incompetence of our existing systems of governance and regulations, the amended legislation has not thought through the consequences of such fundamental changes on the diverse stakeholders.

Introduced by stealth

Surprisingly, the Bill was introduced almost by stealth. The draft of the Bill was not in the public domain till it was introduced in the Lok Sabha on September 20. There was no pre-legislative public consultations nor were there any stakeholder consultations. In times where the norm has been to put draft legislation in the public domain for comments along with robust stakeholder consultations, this is odd.

This gives credence to the perception that this Bill was promoted by political narrow-mindedness without a deliberative process or a vision that is in line with the normative framework of our Constitution. The Bill ignores the fact that India operates under developmental deficits of basic human necessities of food, education, health, shelter livelihoods and human dignity.

The objective of the Bill was to regulate non-governmental organisations by making them accountable and transparent, Minister of State for Home Nityanand Rai told Parliament. Another stated objective was to regulate religious conversions supported by foreign funds. The third, was to broaden the definition of the “government servant” category to include “public servants” among the people who cannot receive foreign funds.

Children in Delhi wait to receive food from NGO volunteers. Credit: Prakash Singh/AFP

Even a cursory reading of the amendments will clearly demonstrate that the changes will not address first two objectives in any way. Instead, new bureaucratic hurdles have been created that are unrelated to these objectives. The third one is clearly an outcome of a specific case (relating to Lawyers Collective) and appears to be a vindictive response that is not rooted in larger questions.

In any case, even if it was an objective (though questionable), it does not justify the wide-ranging amendments. That could have been achieved by a much narrower remit of the legislation.

A moral obligation

As civil society organisations seek accountability from others, it is a moral obligation for them to themselves be accountable and transparent in substantive ways and maintain the highest standards. While this is the stated commitment, it is also important to say that the NGO sector is already one of the most regulated sectors. Organisations already have to present at least four substantive reports to the authorities.

They need to comply with the income tax laws and file their reports regularly. The second relates to their reporting to the FCRA division of the Ministry of Home Affairs. The third is to the Charity Commissioner/Registrar of Companies. The fourth is to the donor. This is in addition to all other laws of the land that are applicable to the sector, such as the Provident Fund Act and Gratuity reporting requirements.

On top of this, the current Foreign Contribution (Regulation) Act mandates that the FCRA division of the home affairs ministry needs to be intimated about even smaller details like a change in bank account or change of address or change of even a single board member within a couple of weeks.

Besides, every quarter on the FCRA website, each FCRA organisation needs to report their FCRA income along with the details of the donor and the project for which the money has been sanctioned. In a country where the dominant mood is to reduce red tape and over-regulation in various sectors, it is curious to describe the levels of regulations discussed above as inadequate.

More redtape

There is no denying the fact that there are black sheep in the sector (as there are in any other sector). But sincere adherence to the existing framework could easily weed them out. Importantly, none of the amendments proposed in reality will increase any accountability and transparency. Instead, they will overload the NGOs with new bureaucratic tasks and open the floodgates for arbitrary, vindictive action by the authorities.

The discussion on conversions appear as a bolt from the blue in the context of the proposed amendments. A careful reading of all the arguments in favour of this objective fails to establish the amendments will achieve it. It is clearly a red herring and a tool to galvanise political support from the government’s Hindutava base.

It is important to underscore that it is a myth that foreign sources of money are largely church based. The overwhelming majority of donors are philanthropic bodies or governmental agencies that have no association with the church. Similarly, the extraordinary majority of organisations at the receiving end have nothing to do with religion. Instead, they focus on developmental questions like poverty eradication, creating livelihood options for the poorest of the poor or work for gender justice.

Now that the Bill has been approved, it is important to examine the key amendments and its implications to understand why VANI – the Voluntary Action Network India – calls this bill as “death blow” to the sector. Let us pick the five important changes proposed.

A devastating blow

First, an FCRA grant cannot be re-granted to other organisations even if they have FCRA clearances. This is a devastating blow to the way civil society functions. At the heart of why NGOs perform such re-granting is the idea of collaborative functioning to ensure pooling of diverse competencies to address difficult social problems. It also recognises the reality that most NGOs in India are rather small and focus on their work with communities and do not have the skill sets to write proposals and liaison with the donors. In one stroke, this entire model of bringing relief and support to millions of poor and ordinary citizens will be compromised.

We need to be cognisant of the fact that even earlier, FCRA money could be re-granted only to organisations with FCRA approvals. When they have already been vetted by the FCRA division, what was the need for stopping this mode of operation? In effect, the work on the ground will suffer and the small organisations will be elbowed out by big organisations.

Second, administrative expenses of organisations receiving FCRA funds have to be capped at 20%. This is a case of complete legislative overreach. If the donor agrees to a budget that might support administrative expenses of higher magnitude, then why should the government object? It is a fundamental principle of law that is getting subverted by giving the state unbridled power to enter into the space of a contract between two entities.

Volunteers screen residents of Mumbai's Dharavi slum for coronavirus. Credit: Punit Paranjpe/ AFP

Leaving aside the deeper philosophical questions, it is operationally also a disaster. This needs to be understood in the context of how civil society organisations function. This 20% might be feasible in a service delivery organisation where the entity works with reasonably large budgets and direct implementation. However, if the NGO plays other roles like research, training or advocacy, then the 20% would be a ridiculously low number. In effect this would mean that the government will only allow service delivery organisations and not allow NGOs that play many other critical roles in society.

This also needs to be read with the fact that often the higher administrative expenses from foreign funds play a very important role in cross-subsidising other large government or Corporate Social Responsibility projects. Most government projects or CSR projects limit administrative overheads to 5%-6%. This is not a viable figure but given the importance of these projects, NGOs often negotiate higher administrative expenses with the FCRA projects to provide a cross-subsidy.

Third, one of the most bizarre proposals in the bill is the need for all FCRA organisations to have their FCRA bank account in a Delhi branch of State Bank of India. If one overlooks the tragic level of centralisation being proposed and state’s deep suspicion of even its own banking system (including public banks), then it appears as black comedy in times of internet and push for digital India.

Fourth, the need for all key functionaries to furnish their Aadhaar cards. This insistence even after the Supreme Court judgement on Aadhaar is disappointing. Every credible civil society group would be willing to share their details, including individual details. However, why is Aadhaar essential? Why could a copy of passport, PAN or a similar document not achieve the same function of transparency and accountability.

Finally, the powers of action given to the government by increasing the number of days for investigation or for seizure of property and other provisions, will only make an already draconian law more draconian in practice. Even currently, there are enough cases that the government has not adhered to six months as the time framework for completing its enquiry and this amendment now would further open the floodgates for vindictive, disproportionate and arbitrary action against voices challenging the government.

Amitabh Behar is a civil society leader who works on issues of governance accountability and citizens participation. He is currently the CEO of Oxfam India. Views are personal.