NGOs

FOREIGN DONATIONS AND ITS REGULATION

Context: Ministry of Home Affairs which is the nodal ministry for administration of FCRA Act registered 1,111 NGOs and associations enabling them to receive foreign donations. This is the highest number of FCRA registrations since 2014. Registration under FCRA is mandatory to receive foreign donations. The NGO must have a definite cultural, economic, educational, religious, or social program to get registered under the FCRA Act.

FCRA has been contentious for NGO sector as 6,000 NGOs have been de-registered from January 1, 2022, by the Ministry of Home Affairs. This curbed funding for these NGOs to receive funding forcing them to scale down their operations.

BASICS OF FCRA

Applicability of FCRA

As per Section 1(2) of FCRA, 2010, the provisions of the act shall apply to:
- Whole of India
- Citizens of India outside India.
- Associate Branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India

Entities that can make foreign contribution

Any “Person” can receive foreign contribution subject to following conditions.
- It must have a definite cultural, economic, educational, religious, or social program.
- It must obtain FCRA registration/prior permission from Central Government, specifically Ministry of Home Affairs.
- It must not be prohibited under Section 3 of FCRA, 2010.

Entities prohibited under FCRA to receive FCRA

As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution:
- Candidate for election.
- Correspondent, columnist, cartoonist, editor, owner, printer, or publisher of a registered newspaper.
- Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government.
- Member of any legislature.
- Political party or office bearer thereof.
- Organization of a political nature as may be specified by the Central Government.
- Association or company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmes through any electronic mode, or any other electronic form or any other mode of mass communication.
- Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (g).
- Individuals or associations who have been prohibited from receiving foreign contribution.

Permission to accept Foreign Contribution

There are two modes of obtaining permission to accept foreign contribution according to FCRA, 2010:
- Registration
- Prior Permission

Eligibility criteria for grant of registration

For grant of registration under FCRA, 2010, the association should:
- Be registered under an existing statute like the Societies Registration Act, 1860 or Indian Trusts Act, 1882 or Companies registered under Section 8 of the Companies Act, 2013 for Charitable Purposes
- Normally be in existence for at least 3 years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized.

Eligibility criteria for grant of prior permission

Prior permission is granted for receipt of a specific amount from a specific donor for conducting specific activities/projects. For this purpose, the association should meet following criteria:
- Be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 etc.
- Submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given; and
- For Indian recipient organizations and foreign donor organizations having common members, FCRA Prior Permission shall be granted to the Indian recipient organizations subject to it satisfying the following:
- The Chief Functionary of the recipient Indian organization should not be a part of the donor organization.
- At least 75% of the office-bearers/ members of the Governing body of the Indian recipient organization should not be members/employees of the foreign donor organization.
- In case of foreign donor organization being a single person/individual that person should not be the Chief Functionary or office bearer of the recipient Indian organization.
- In case of a single foreign donor, at least 75% office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.

Conditions to be met for Grant of Registration and Prior Permission

In terms of Sec.12 (4) of FCRA, 2010, the following shall be the conditions for the grant of registration and prior permission:
- The 'person' making an application for registration or grant of prior permission-
  - is not fictitious or benami.
  - has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another.
  - has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country.
  - has not been found guilty of diversion or mis-utilization of its
  - is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends.
  - is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes.
  - has not contravened any of the provisions of this Act.
  - has not been prohibited from accepting foreign contribution.
  - the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him. the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.
- Acceptance of foreign contribution by association/ person is not likely to affect prejudicially.
  - the sovereignty and integrity of India.
  - the security, strategic, scientific, or economic interest of the State.
  - the public interest.
  - freedom or fairness of election to any Legislature.
  - friendly relation with any foreign State.
  - harmony between religious, racial, social, linguistic, regional groups, castes, or communities.
- the acceptance of foreign contribution
  - shall not lead to incitement of an offence.
  - shall not endanger the life or physical safety of any person.

Need for Foreign Contribution (Regulation) Amendment Act, 2020

Increase in Annual Flow of Income: Annual inflow of foreign contribution had almost doubled between the years 2010 and 2019. However, many recipients of foreign contribution have not utilized the same for the purpose for which they were registered or granted prior permission under the said Act.
Lack of Compliance such as submission of annual returns and maintenance of proper accounts. Due to this, the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-Governmental organisations, during the period between 2011 and 2019.
Criminal investigations due to misappropriation of funds by NGOs was initiated against dozens of such non-Governmental organisations which indulged in outright misappropriation or misutilization of foreign contribution.
Need to strengthen compliance mechanism, enhancing transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year.
Facilitate genuine NGOs or associations who are working for the welfare of the society.

Foreign Contribution (Regulation) Amendment Act, 2020 provides for

Include "public servant" within its ambit, to provide that no foreign contribution shall be accepted by any public servant.
Prohibit any transfer of foreign contribution to any association/person.
Reduce the limit for defraying administrative expenses from existing "fifty per cent" to "twenty per cent.
Insertion of a new Section 12A empowering the Central Government to require Aadhaar number, etc., as identification document.
Enabling the Central Government to permit any person to surrender the certificate granted under the Act.
Ensure that every person who has been granted certificate or prior permission under section 12 shall receive foreign contribution only in an account designated as ‘‘FCRA Account’’ which shall be opened by him in such branch of the State Bank of India at New Delhi, as the Central Government may, by notification, specify and for other consequential matters relating thereto.

Supreme Court Judgement upholding FCRA Amendment 2020

Supreme court has upheld the amendment to the FCRA Act in 2020. There was challenge from parties that the amendment is constraining and seems to constrain freedom of NGOs sector to draw foreign aid and constrains their operation.

Strict Regulatory Framework: The amendments only provide a strict regulatory framework to moderate the inflow of foreign funds into the country.
Uncontrolled flow of money may Impact socio-economic structure: The presence/inflow of foreign contribution in the country ought to be at the minimum level, if not completely avoided. The influence may manifest in diverse ways, including in destabilizing the social order within the country,
NGOs must look within for donors: The court said charity could be found at home and NGOs could look within the country for donors.
Foreign Donation Not Good for a Self-Reliant Country like India: The third-world countries may welcome foreign donations, but it is open to a nation, which is committed and enduring to be self-reliant and variously capable of shouldering its own needs, to opt for a policy of complete prohibition of inflow/acceptance of foreign donation from a foreign source.
Reflects Badly on the Country: Unregulated inflow of foreign donations would only indicate that the government was incapable of looking after its own affairs and needs of its citizens.
Unregulated foreign funding strains government’s efforts in regulation: The court noted how 19,000 certificates of registration under the FCRA were cancelled for violating statutory compliances. The annual inflow of foreign contribution had almost doubled between the years 2010 and 2019. There was a spurt of criminal investigations. Donations had been re-routed. Successive transfers and creation of a layered trail of money had made it difficult to trace the flow and final utilisation of foreign donations despite the “firm regime” in place since 2010.
The amendments do not prohibit inflow of foreign contributions but are a regulatory measure to permit acceptance by registered persons or persons having prior permission to do so with condition that they must themselves utilise the entire contribution.
Restrictions are Reasonable: The court held that the restrictions in the amendments were “reasonable” and “founded on intelligible criteria”. It fixed accountability on the recipients, increased the efficacy of “continual supervision” over foreign contributions, did not discriminate and served the purpose of the FCRA 2010.
Court allowed use of Indian Passport instead of Aadhaar: The court read down one of the provisions - Section 12(A) of 2020 Amendment Act, which mandated the production of Aadhaar card for registration. The Bench allowed the office-bearers of NGOs to use their Indian Passports as an identification document.

Concerns against FCRA Amendment

UN Human Rights Council in its Resolution 22/6 on Protecting Human Rights Defenders declared that “no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding”.
UN Special Rapporteur on Assembly and Association has clarified that controls in laws should not “unduly obstruct the legitimate work” and need to be “fair, objective and non-discriminatory, and not be used as a pretext to silence critics”.
Fail to comply with International Legal Obligations: ICJ claimed that FCRA Amendment fails to comply with India’s international legal obligations and constitutional provisions to respect and protect the rights to freedom of association, expression, and freedom of assembly.
Impose Arbitrary Obstacles by the Government: ICJ stressed that the Bill’s provisions would impose arbitrary and extraordinary obstacles on the capacity of human rights defenders and other civil society actors to conduct their important work.
Against Civil Societies in India: ICJ noted that the restrictions in the Bill continued a larger pattern of threats and harassment faced by civil society in India. The Indian Government has sought to restrict human rights defenders from traveling outside India and used overbroad laws like sedition (Section 124A, Indian Penal Code) and Unlawful Activities Prevention, 1967 Act to arbitrarily arrest human rights defenders.
Restrict Access to Foreign Funding: FCRA 2020 provides for overly broad rules and measures which would effectively restrict access to foreign funding particularly for public servants and smaller non-governmental organizations.
Adds government’s oversight: Adds onerous governmental oversight, additional regulations and certification processes, and operational requirements, while simultaneously reducing the limit of administrative expenditure that can be allocated to foreign contributions to 20% from previous 50%.

Importance of NGOs for National Development

Key Drivers of inter-governmental negotiations ranges from regulation of hazardous wastes to a global ban on land mines and the elimination of slavery.
Promotes legal reforms pushes government to undertake important reforms through legislations affecting rights and services for vulnerable sections of the society.
Helps in Capacity Building and filling development deficit in diverse sectors health, education, environment awareness, social inclusion, skill enhancement etc.
Helps alleviation of Poverty & Hunger
Supplements electoral democracy by updating governments regularly of public opinion in favour of certain issues or concerns on certain welfare schemes.
Ensures Community Participation by raising awareness on important national, Regional or Local Issues helps to strengthen participatory democracy in India.
Helps government to understand challenges of industry eg: Finance Ministry organize sessions with FICCI, IFCI to understand concerns and challenges of different industrial sector.
Competition among civil societies is beneficial and productive for citizens & government.
Provides platform for vulnerable sections to raise their voice eg concerns of prostitutes, LGBT, HIV victims, victims of custodial torture, manual scavenging, Dalit violence.
Ensures Women Empowerment by providing livelihood measures.

Criticism of NGOs

Unnecessary PIL filed in Courts without sufficient evidence. This has led to an increase of PIL culture in the High Courts & Supreme Court.
Promote Vested Interests of groups whom they wish to support.
Some NGOs involved in misuse of foreign funding received under FCRA.
Create additional pressure on the government by providing misleading arguments.
Cannot be said to be truly democratic as they represent small section of the society including those who fund their functioning.

Self Help Group

Context: A women’s self-help group (SHG) model in Rajasthan’s Dholpur district has helped about 12,500 women in the western African countries of Mali and Senegal earn livelihoods, conserve environment and establish cooperative federations to take up farming, biogas production, poultry farming and goat rearing.

Women's Self-Help Group (SHG) Model in Rajasthan's Dholpur District

Origin and Scope:
- SHG model initiated by Rajasthan Grameen Ajeevika Vikas Parishad (Rajeevika) in Dholpur district, Rajasthan.
- Aims to empower rural women through economic activities and sustainable practices.
Expansion to Africa:
- Impact in Mali and Senegal: Supported 12,500 women in Mali and Senegal.
- Women engaged in farming, biogas production, poultry farming, and goat rearing.
- Formation of cooperative federations for collective economic growth.
Mutual Exchange:
- Training Programs: Women leaders from Mali and Senegal visited Rajasthan for training in new vocations.
- Dholpur SHG members previously visited Mali and Senegal to share expertise.
Core Principles:
- Rajeevika's Five Principles: Weekly meetings, savings, internal borrowing, loan repayment, and record maintenance.
- Facilitated financial stability and growth of SHGs and federations.
Market Penetration:
- Pancharatna Mission: Enhanced market reach for SHG products.
- Rural women's exposure to agricultural technology pivotal for SHG model success.
Financial Empowerment:
- Financial Practices: Savings up to ₹17 crore annually by African women.
- Funds utilized for inter-loaning and emergencies, promoting self-sufficiency.
Capacity Building:
- Skill Transfer: Training in SHG formation and cooperative federation establishment.
- Emphasis on sustainable agricultural practices suitable for local climates.
Future Collaboration:
- Continued Cooperation: Plans for ongoing collaboration between Rajasthan and African counterparts.
- Focus on socio-economic development and self-governance in rural communities.
Testimonials:
- Leadership Impact: African representatives impressed by Rajasthan's leadership election processes.
- Commitment to implementing Rajeevika's principles and promoting entrepreneurship.
Technological Adoption:
- Water Harvesting Techniques: Adoption in African countries inspired by Rajasthan's practices.
- Aim to enhance agricultural productivity through innovative irrigation methods.

This SHG model exemplifies international cooperation in empowering women through sustainable livelihoods and community development initiatives.

What is SHG?

SHGs, or Self-Help Groups, are small voluntary associations of individuals, predominantly women, who come together for a common purpose. In India, SHGs have gained significant importance as a grassroots-level institution for poverty alleviation, women's empowerment, and community development. Here are some key characteristics and features of SHGs in India:

Composition: SHGs typically consist of 10 to 20 individuals who belong to a common socio-economic background and reside in the same geographical area. While women are the primary members, some SHGs also include men or are exclusively composed of men.
Voluntary Association: Participation in SHGs is based on voluntary membership, where individuals join the group willingly to address their socio-economic needs and challenges collectively.
Savings and Credit Activities: One of the primary functions of SHGs is to encourage members to save small amounts regularly. These savings are pooled together and used to provide internal loans to group members. SHGs also facilitate access to formal financial services and credit linkages from banks and microfinance institutions.
Social and Emotional Support: SHGs provide a platform for members to share experiences, seek advice, and provide social and emotional support to each other. They act as forums for discussing and addressing issues related to health, education, gender equality, and other social concerns.
Capacity Building: SHGs offer training and capacity-building programs to members, focusing on various aspects such as financial literacy, bookkeeping, entrepreneurship, skill development, and leadership. These initiatives aim to enhance members' knowledge and skills, enabling them to effectively manage their group activities and pursue livelihood opportunities.
Collective Decision Making: SHGs operate democratically, with members actively participating in decision-making processes. They engage in discussions, develop internal rules and regulations, and make collective decisions related to savings, loans, and other group activities.
Income-Generating Activities: SHGs encourage members to engage in income-generating activities to improve their livelihoods. This may include activities like handicrafts, agriculture, animal husbandry, small-scale enterprises, and entrepreneurship. SHGs often provide support in terms of skill development, market linkages, and access to credit for such activities.
Federations and Linkages: SHGs often form federations or larger networks at the village, district, or state levels to amplify their collective voice, negotiate better deals, and access additional resources and opportunities. These federations enable SHGs to undertake larger-scale initiatives and represent their collective interests.

Benefits of SHGs

Mobilizes women from rural areas: According to the estimates, about 46 million rural poor women are mobilized through SHGs architecture. These organizations have been an effective vehicle, especially in providing financial intermediation solutions for unbanked rural women.
Socio-economic benefits: It includes economic self-independence, participation in village affairs and awareness about education.
Special Focus: Under National Rural Livelihood Mission, special attention has been given to women living below poverty line (BPL). The scheme has also focused on capacity building and institutionalization of SHGs. It has also helped in social mobilization, institution building, communization and creation of human resource.
Improves the status of women in family and society: Regular process of group meetings helps women build social capital which raises their status in the family and the society. It also leads to economic empowerment which helps them take decision making role in the family. Thus help them break shackles of patriarchy.
Improves health and standard of living: A research has also shown that Women practicing ‘participatory learning and action’ showed 49 % reduction in maternal mortality and 33 % reduction in neonatal mortality.

General Issues related to SHGs

Agricultural Activities: Most of the SHGs work at local level and engaged in agricultural activities. SHGs in rural areas should be introduced to non-agricultural businesses too and should be provided with state-of-the art machinery.
Lack of Technology: Most of the SHGs work with rudimentary or no technology.
Access of market: Also the goods produced by SHGs do not have access to larger market place.
Poor Infrastructure: Most of these SHGs are situated in rural and far reach areas that lack connectivity via road or railways. Access to electricity remains an issue.
Lack of training and capacity building: Most of the SHGs work on their own without outreach from the state for skill development and capacity building.
Credit Mobilization: A study has shown that about 48% of the members had to borrow from local money lenders, relatives and neighbours because they were getting inadequate loan from groups. Also issues like hoarding of money was witnessed.
System of monitoring: The general reports on the progress of SHGs show statistics of growth and spread of SHGs without questioning the process and internal health of the SHGs.

The government, through various initiatives and programs, has recognized the potential of SHGs in promoting socio-economic development, women's empowerment, and poverty reduction. As a result, SHGs have become an integral part of many government schemes and interventions aimed at inclusive growth and sustainable development in India.

The Indian government has implemented several steps to support and assist SHGs across the country. Here are some of the key measures taken:

National Rural Livelihood Mission (NRLM): The NRLM, launched in 2011, aims to promote and strengthen SHGs in rural areas. It provides financial assistance, capacity-building training, and livelihood support to SHGs. The program also focuses on promoting federations of SHGs to enhance their collective strength.
Financial Inclusion and Microfinance: The government has encouraged financial inclusion by facilitating access to formal financial services for SHGs. The Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme promotes opening bank accounts for every household and facilitates access to credit and insurance services. SHGs also receive microfinance support through schemes like the National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI).
Interest Subsidy and Credit Linkage: SHGs are linked with various credit schemes to provide financial support for income-generating activities. The government provides interest rate subsidies to reduce the burden on SHG members and enhance their repayment capacity. The Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) offers capitalization support and interest subvention to SHGs.
Capacity Building and Skill Development: The government focuses on capacity building and skill development of SHG members. They are provided with training programs on financial literacy, entrepreneurship, market linkages, and management skills. The programs are designed to enhance their overall capacity to manage and sustain their enterprises.
Market Linkages and Promoting Enterprises: Efforts are made to connect SHGs with markets and value chains. The government supports market linkages for SHG products through initiatives like the Rural Haat Bazaars, Marketing Assistance Scheme, and procurement programs by government agencies. SHGs are encouraged to engage in various income-generating activities such as handicrafts, agriculture, dairy, and small-scale industries.
Legal and Policy Support: The government has implemented policies and legal provisions to facilitate the functioning and empowerment of SHGs. The Companies Act, 2013, allows SHGs to register as Producer Companies, enabling them to access markets directly. The National Rural Livelihoods Promotion Society (NRLPS) provides policy and technical support to promote SHGs.
Government Schemes: SHGs are actively involved in the implementation of various government schemes at the grassroots level. They play a significant role in initiatives such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Swachh Bharat Abhiyan, and National Rural Drinking Water Program, among others.

These steps taken by the government are aimed at strengthening SHGs, providing them with financial support, enhancing their skills, and promoting their overall development and empowerment.