The front pages of Indian newspapers contain so much news on cricket and Bollywood that one would be forgiven for thinking that little else is happening in the country. In the midst of the mainstream media’s focus on inane chatter, the Indian Parliament passed on 23rd September an important law, The Foreign Contribution (Regulation) Amendment Bill, 2020. In this piece, Amitabh Behar, the CEO of Oxfam India, explains why this amendment is a big deal for the NGO sector in India.
Mr Behar begins by stating the reasons given by the Government for expediting the said regulation: “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.”
Mr Behar then gives his views on whether the amendment will help the Government meet these objectives. His arguments are broadly along three planks.
Firstly, “…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.”
Secondly, Mr Behar focuses on the subject of religious conversion: “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 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….”
Thirdly, he focuses on the longer term structural impact of this legislation on the NGO sector in India: “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….
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….
Second, administrative expenses of organisations receiving FCRA funds have to be capped at 20%….If the donor agrees to a budget that might support administrative expenses of higher magnitude, then why should the government object? ….
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…
Fourth, the need for all key functionaries to furnish their Aadhaar cards. This insistence even after the Supreme Court judgement on Aadhaar is disappointing…”
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: the above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services. Marcellus Investment Managers is also regulated in the United States as an Investment Advisor.
Copyright © 2022 Marcellus Investment Managers Pvt Ltd, All rights reserved.