Why Have 9,000 Indian NGOs Been Deregistered?

April 28, 2015; Reuters

In the wake of news that the Indian government has acted against both Greenpeace and the Ford Foundation, further reports that up to 9,000 NGOs receiving foreign funding have had their registrations terminated have caused consternation. Is the motivation a “hostile” suppression of civil society, an attempt to make the sector more accountable, or some mixture of the two?.

An article in India’s Business Standard provides more background. Firstly, it points out that this is not a sudden rush to action. Notices were issued to 10,343 NGOs six months ago, on October 16, 2014. The notices were for not filing annual returns for three past financial years: 2009–10, 2010–11 and 2011–12. Only 229 of the 10,343 NGOs replied. (Nonprofits in the United States will recognize this kind of regulatory action, since our sector has recently gone through “the great IRS purge.”) As Harsh Jaitli, chief executive of Voluntary Action Network India, an umbrella organization of NGOs, pointed out, many of these organizations might have become defunct and closed down, and it was important to weed them out.

In fact, these deregistrations target only a tiny fraction of this massive number of NGOs. Indian regulations allow registration of NGOs, but there is no mechanism for their voluntary deregistration. As a result, there are around 1.2 million NGOs registered in India, many of which are inactive. There is approximately one NGO for every 600 people in India. In contrast, there is only one policeman for around 963 people.

Even more context given by Business Standard is the quantum of foreign donations flowing in to NGOs. During 2011–12, a total of 22,702 associations reported receipt of foreign contributions amounting to Rs 11,546.29 crore (US$1.8 billion). The largest of these amounts was to World Vision of India, which received Rs 233.38 crore (US$37M); followed by the Believers Church India, Kerala (Rs 190 crore/$30M); the Rural Development Trust, Andhra Pradesh (Rs 144.39 crore/$22.7); the Indian Society Of Church Of Jesus Christ Of Latter Day Saints, Delhi (Rs 130.77 crore/$20.6); and the Public Health Foundation of India, Delhi (Rs 130.31 crore/$20.5).

Unfortunately, aside from foreign contributions, there is no robust data on the total receipts of all of India’s NGOs. For some indication of the economic size of India’s NGO sector, it is necessary to go back to estimates from 1999–2000. Receipts then stood at approximately Rs 18,000 crore (US$4 billion) in year 2000 currency. As another approximation of the size of the sector, the salaries and wages paid by Indian NGOs were then said to stand at 14.8 percent of GDP. Applying that percentage to India’s current GDP of $7.277 trillion (according to the CIA World Factbook) would today produce a figure of $US 1.08 trillion as a broad proxy for the total size of the sector.

Foreign donations totalling $1.8 billion are therefore in the order of two percent of the approximate size of the Indian NGO sector. They are not huge by any standards.

One other significant fact that is lost in the current chatter is that the regulation of foreign contributions to NGOs dates to the previous Manmohan Singh government. The current legislation on foreign contributions came into force in 2010. The then-government said:

“The general policy of the government of India is not to encourage soliciting of foreign contribution. However, if it is intended for bona fide welfare activities, foreign contribution can be received either by obtaining registration or prior permission under the FRCA 2010.”

Under the previous Indian government, the Home Ministry had also issued notices to around 21,000 NGOs that hadn’t filed their returns from 2006–2009. It eventually cancelled the registration of 4,138. These were cases where letters were returned undelivered by postal authorities.

However, Jaitli says, “The genuine NGOs are also being targeted. The [foreign contributions] department under the home ministry also doesn’t have exact data on the NGOs and is not working in a transparent manner. Even if an NGO might have submitted returns, the department won’t acknowledge or respond. So you are kept in the dark always.”

He adds, “This hostile approach is bad for the society and country.”

In January this year, the Indian Home Ministry placed 10 foreign-funded agencies under restrictions that require their donations from abroad to be approved before release. The majority of these organisations are faith-based organisations, funding mostly in south India. The ten are: