Date: 12/12/2022

Relevance: GS-2: Development Processes and the Development Industry — the Role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.

Key Phrases: non-governmental organizations (NGOs), Civil society, Foreign Contributions (Regulation) Act (FCRA), Prevention of Money Laundering Act (PMLA), Unlawful Activities Prevention Act.

Why in News?

• The Indian state is deeply suspicious of civil societies, and civil society leaders, and it is evident from the warning of the National Security Advisor that civil society is the new frontier of war.

Role of civil societies:

• Watchdog: holding public institutions to account, promoting transparency and accountability
• Advocacy: raising awareness of societal issues and challenges and advocating for change.
• Service: delivering welfare services to meet societal needs such as education, health, food, and security; implementing disaster management, preparedness, and emergency responses.
• Domain Expert: bringing unique knowledge and experience to shape policy and strategy, and identifying and building solutions.
• Capacity builder: providing education, training, skills, and other capacity building.
• Incubator: developing solutions that may require a long gestation or payback period.
• Representative: giving power to the voice of the marginalized or underrepresented.
• Citizens’ champion: encouraging citizens’ engagement and supporting citizens’ rights.
• Solidarity adherent: promoting fundamental and universal values.
• Definer of standards: creating norms that shape social, economic, and state activity

Regulation of civil societies:

• Even though civil society organizations have contributed to the constitutional frame, they undoubtedly need to be regulated for defending constitutional values.
• Regulation is needed that established minimum public transparency and accountability requirements while aiming at improving the quality of the public sphere.
• The Foreign Contributions (Regulation) Act (FCRA) and the Prevention of Money Laundering Act (PMLA) are used in conjunction with a range of other measures, such as the Unlawful Activities Prevention Act (UAPA), for civil society regulation.

What is the FCRA?

• The FCRA was enacted during the Emergency in 1976 amid apprehensions that foreign powers were interfering in India’s affairs by pumping money into the country through independent organizations.
• The law sought to regulate foreign donations to individuals and associations so that they functioned “in a manner consistent with the values of a sovereign democratic republic”.
• An amended FCRA was enacted in 2010 to “consolidate the law” on the utilization of foreign funds, and “to prohibit” their use for “any activities detrimental to the national interest”.
• The law was amended again by the current government in 2020, giving the government tighter control and scrutiny over the receipt and utilization of foreign funds by NGOs.
• Broadly, the FCRA requires every person or NGO seeking to receive foreign donations to be:
  1. registered under the Act,
  2. to open a bank account for the receipt of foreign funds in the State Bank of India, Delhi, and
  3. to utilize those funds only for the purpose for which they have been received and as stipulated in the Act.

What does the Act prohibit?

• The Act prohibits the receipt of foreign funds by
  1. candidates for elections.
  2. journalists or newspaper and media broadcast companies.
  3. judges and government servants, members of the legislature and political parties or their office-bearers, and organizations of a political nature.

For how long is the approval granted?

• Once granted, FCRA registration is valid for five years. NGOs are expected to apply for renewal within six months of the date of expiry of registration.
• In case of failure to apply for renewal, the registration is deemed to have expired, and the NGO is no longer entitled to receive foreign funds or utilize its existing funds without permission from the ministry.

Cancellation under FCRA:

• The calculations suggest that of the 20,679 civil society organizations that lost their registration between 2011 and May 2022, 3,987 were denied the same from 2011 to 2014.
• Of the 16,692 NGOs that lost their licenses between 2015 and 2022, 16,679 were denied the right between 2015 and 2019 before the Act was amended in 2020.

On what basis is approval cancelled?

• The government reserves the right to cancel the FCRA registration of any NGO:
  • If it finds it to be in violation of the Act.
  • If an inquiry finds a false statement in the application;
  • If the NGO is found to have violated any of the terms and conditions of the certificate or renewal;
  • If it has not been engaged in any reasonable activity in its chosen field for the benefit of society for two consecutive years; or
  • If it has become defunct.
• It can also be cancelled if “in the opinion of the Central Government, it is necessary for the public interest to cancel the certificate,” the FCRA says.
• Registrations are also cancelled when an audit finds irregularities in the finances of an NGO in terms of misutilisation of foreign funds.
• According to FCRA, no order of cancellation of the certificate can be made unless the person or NGO concerned has been given a reasonable opportunity of being heard. Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years.
• The ministry also has the power to suspend an NGO’s registration for 180 days pending inquiry and can freeze its funds.
• All orders of the government can be challenged in the High Court.

Conclusion:

• Civil society has a particularly powerful role to play in this process as an enabler and constructive challenger, creating the political and social space for collaborations that are based on the core values of trust, service, and the collective good.
• Both government and civil society urgently need to work together to build institutional relationships based on mutual trust and a shared vision.
• The government needs to ensure that the regulations do not create hurdles for civil society organizations in their functioning and receiving funding.

Source: The Hindu

Mains Question:

Q. What are civil society organizations, and how are they regulated in India for better transparency and accountability? Discuss.