CONCEPT NOTE: Non-Governmental Organizations [“NGOs”] in India: Legal and Regulatory Issues
By
Ramni Taneja
Paper presented by Ramni Taneja at the
Roundtable on Best Practices in NGO Governance:
Issues and Challenges:
Organized by National Law University, Delhi in collaboration with
The Charity Commission, United Kingdom
10th February, 2010
Venue: National Law University, Delhi, Sector-14, Dwarka,
New Delhi - 110078
HISTORY AND BACKGROUND OF NGOs IN INDIA
“Be the change you want to see in the world.” – Mahatma Gandhi
These philosophical words penned by the father of the nation, Mahatma Gandhi, symbolize the spirit and rationale of the concept of an NGO. The purpose of this Concept Note is to examine the various hues and colours of an NGO in the Indian legal, political and social milieu.
In a country like India, which is the world’s largest democracy, the seventh largest country in the world in terms of land area and the second most populous country in the world, the relevance of the NGO as a concept in theory and in practice, as a vibrant means of ensuring that the concerns of the citizens of this country derive protection in terms of the rule of law, can hardly be over-emphasized. The Constitution of India, provides an extraordinary source of valuable fundamental rights for the protection of the rights of individuals. It is these rights, coupled with the Directive Principles of State Policy that are relied upon by NGOs in their pivotal role in supporting individuals for the enforcement of their rights in India.
India has a long history of civil society based on the concepts of ‘daana’ [giving] and ‘seva’ [service] . These concepts have survived over centuries and in a sense epitomize the spirit of giving and service which forms the cornerstone of an NGO. During the days of the British Empire, voluntary organizations flourished with the objective being to improve social welfare, literacy and relief projects . In a detailed and comprehensive analysis prepared by the Asian Development Bank, the history of the NGO has been traced from Mahatma Gandhi’s mission to encourage villages to be self-reliant, to post independence development, leading to the creation of the Central Social Welfare Board in 1953, the establishment of the National Community Development Programme, the National Extension Service, and the three-tier Panchayati Raj system in 1958. Subsequently, the Association for Voluntary Agencies for Rural Development [AVARD] was established as a consortium of major voluntary agencies.
India has recently celebrated sixty years as a Republic on 26th January 2010. The last sixty years have witnessed an extraordinary blossoming of NGOs, especially during the 1970s and the 1980s. The 1990s have also seen a phenomenal growth in voluntary organizations or NGOs with civil society taking an active interest in their development and progress. International funding and support from international donors has also been noteworthy during the last few decades of the 20th century. With about 1.5 million NGOs in India, this demonstrates their unique presence and existence in this country.
GOVERNMENT OF INDIA’S NATIONAL POLICY ON THE VOLUNTARY SECTOR - 2007
In May 2007, the Government of India issued its National Policy on the Voluntary Sector [the “Policy”]. The Preamble to this Policy indicates the importance given by the Government of India to this Policy:
“Preamble
1.1 This Policy is a commitment to encourage, enable and empower an independent, creative and effective voluntary sector, with diversity in form and function, so that it can contribute to the social, cultural and economic advancement of the people of India.
1.2 The voluntary sector has contributed significantly to finding innovative solutions to poverty, deprivation, discrimination and exclusion, through means such as awareness raising, social mobilization, service delivery, training, research, and advocacy. The voluntary sector has been serving as an effective non-political link between the people and the Government. This policy recognizes the important role that the voluntary sector has to play in various areas and affirms the growing need for collaboration with the voluntary sector by the Government, as well as by the private sector, at the local, provincial and national levels.”
The Scope of the Policy, defines the concept of voluntary organizations. In the Policy voluntary organizations (VOs) mean to include organizations engaged in public service, based on ethical, cultural, social, economic, political, religious, spiritual philanthropic or scientific and technological considerations. VOs include formal as well as informal groups, such as: community-based organizations (CBOs); non-governmental development organizations (NGDOs); charitable organizations; support organizations; networks or federations of such organizations; as well as professional membership associations.
To be covered under the Policy, VOs should broadly have the following characteristics:
a) They are private, i.e., separate from Government
b) They do not return profits generated to their owners or directors
c) They are self-governing, i.e., not controlled by Government
d) They are registered organizations or informal groups, with defined aims and objectives.
The Policy also sets out its objectives, it provides details with regard to establishing an enabling environment for the voluntary sector, and most importantly, the concept of “partnership in development”. Some of the relevant extracts from the Policy in the context of “Partnership in Development” are quoted hereafter:
Partnership in Development
5.1 The voluntary sector can play an important role in the development process, particularly through community participation. VOs can offer alternative perspectives; committed expertise; an understanding of the local opportunities and constraints; and perhaps most importantly, the capacity to conduct a meaningful dialogue with communities, particularly those that are disadvantaged. It is therefore essential that the Government and the Voluntary Sector work together. Where feasible, such partnership may also include other entities such as panchayati raj institutions, municipalities, academic institutions, and private sector organizations.
5.2 Partnership between Government and VOs implies identifying shared goals and defining complementary roles. It must be based on the basic principles of mutual trust and respect, with shared responsibility and authority. These principles must be explicit in the terms and conditions of the partnership. They must also be evident in the formal and informal systems of collaboration.
5.3 This Policy recognizes three instruments of partnership, viz., (i) consultation, through a formal process of interaction at the Centre, State and District level; (ii) strategic collaboration to tackle complex interventions where sustained social mobilization is critical over the long term; and (iii) project funding through standard schemes. The Government will ensure that these three instruments of partnership are given due attention in Annual Plans prepared by Ministries and States. The action that will be taken in respect of each of the three instruments is discussed in the following paragraphs.
5.4 The Government will encourage setting up of Joint Consultative Groups / Forums or Joint machineries of government and voluntary sector representatives, by relevant Central Departments and State Governments. It will also encourage district administrations, district planning bodies, district rural development agencies, zilla parishads and local governments to do so. These groups will be permanent forums with the explicit mandate to share ideas, views and information and to identify opportunities and mechanisms of working together. The Government will introduce suitable mechanisms for involving a wide cross-section of the voluntary sector in these Groups / Forums.
5.4.1 The expertise of the voluntary sector will also be utilized, by including experts from VOs in the committees, task forces, and advisory panels constituted by the Government from time to time to help address important issues.
5.5 The country faces a number of complex problems that require adaptive, multi-sectoral solutions where sustained social mobilization is particularly important. These include poverty alleviation, skill promotion, entrepreneurship development, empowerment of women, population stabilization, combating HIV/AIDS, managing water resources, elementary education and forest management, to name a few. Such areas urgently require strategic collaboration between the Government and VOs, through national level programmes that are long-term in duration, and utilize multiple strategies, methodologies and activities to achieve their objectives. The Government will identify national collaborative programmes to be implemented in partnership with VOs. Each national collaborative programme will involve a finite set of reputed, medium or large VOs with a proven track record, and the ability to work on a reasonably large scale. The Government will ensure that such national collaborative programmes are given due importance in Plan documents.
5.6 The third instrument of partnership between the Government and the voluntary sector is project funding. A large number of Government agencies operate schemes for financial assistance to VOs. These schemes usually deal with activities such as surveys, research, workshops, documentation, awareness raising, training, creation and running of public welfare facilities, and so on. Project grants are a useful means for the Government to promote its activities without its direct involvement. They are also a valuable source of support to small and medium VOs. Nevertheless, there are legitimate concerns regarding the effectiveness of grant-in-aid schemes. Out-dated design of funding schemes, arbitrary procedures, selection of unsuitable VOs, poor quality of implementation, and misuse of funds are some of the reasons for the possible defeat of the objectives of such funding. Concerned Government agencies would be encouraged to ensure proper accountability and monitoring of public funds distributed to VOs.
5.6.1 Some Central agencies have achieved good results by decentralizing the process of project funding. Rather than administering various schemes directly, they appoint regional or State level intermediary organizations to do so on their behalf. This allows for closer interaction for better selection and monitoring of VOs. Intermediaries could include umbrella VOs, professional or academic institutes, State Government agencies, or multi-stakeholder standing committees. The Government will review the experience of such decentralized funding and make suitable recommendations to Central agencies.
5.6.2 There is reason to believe that accreditation of VOs will lead to better funding decisions and make the funding processes more transparent. Further, accreditation may provide incentives for better governance, management and performance of VOs. No reliable accreditation system is in place at present. The Government will encourage various agencies, including those in the voluntary sector, to develop alternative accreditation methodologies. It will allow time for such methodologies to be debated and gain acceptability in the voluntary sector, before considering their application to Government funding of VOs.”
Lastly, the Policy dwells at length on its vision of strengthening the Voluntary Sector. It recognizes that Indian society has a “well-established” tradition of philanthropy. It mentions the fact that it will encourage existing and new independent philanthropic instituitions and private foundations to provide financial assistance to deserving VOs. It stresses that accountability to all stakeholders and transparency in functioning are key issues in good governance. It also notes that it will recognize excellence in governance among VOs by publicizing best practices. Training is a crucial requirement also recognized by the Government, which also emphasizes that it will support and encourage organizations that train aspirants to enter the voluntary sector, as well as those already working in the sector. It also states that it will encourage and recognize innovative and pioneering work. It also describes its encouragement of volunteers in public services, such as family welfare centres, primary health care centres, hospitals, schools, vocational training centres, sanitation campaigns, etc.
Meaning of NGO
An excellent overview of the origin and genesis of the expression, NGO, from an international perspective is provided in the following analysis :
“The phrase ‘non-governmental organization’ came into use with the establishment of the United Nations in 1945 with provisions in Article 71 of Chapter 10 of the United Nations Charter for a consultative role for organizations that neither are governments nor member states. The definition of international NGO (INGO) is first given in Resolution 288 (X) of ECOSOC on February 27, 1950: it is defined as 'any international organization that is not founded by an international treaty'. The vital role of NGOs and other "major groups" in sustainable development was recognized in Chapter 27 of Agenda 21, leading to revised arrangements for consultative relationship between the United Nations and non-governmental organizations.”
The expression, “NGO” has also been defined in the following terms:
“A non-governmental organization (NGO) is any non-profit, voluntary citizens' group which is organized on a local, national or international level. Task-oriented and driven by people with a common interest, NGOs perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. Some are organized around specific issues, such as human rights, environment or health. They provide analysis and expertise, serve as early warning mechanisms and help monitor and implement international agreements. Their relationship with offices and agencies of the United Nations system differs depending on their goals, their venue and the mandate of a particular institution.”
LEGAL AND REGULATORY FRAMEWORK AND TAX ISSUES REGARDING NGOs
An association of persons with a non-profit motive can be established in the following manner under the relevant laws:
a) As a charitable trust [the laws are analysed below]
b) As a society under the Societies Registration Act, 1860
c) As a non-profit company under Section 25 of the Companies Act, 1956.
A ‘trust’ is defined in Section 3 of the Indian Trusts Act, 1882 as an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another, or of another and the owner”. According to Section 8 of the Indian Trusts Act, 1882, the subject matter of a trust must be property transferable to the beneficiary. It must not be merely a beneficial interest under a subsisting trust. The Indian Trusts Act, 1882 is concerned with private or family trusts. In the case of an NGO, the nature of the trust will naturally have to partake a public character, as the beneficiary of a public trust is the general public. An instrument of trust, or a trust deed is the legal document that reflects the trust, whether public or private. There is also a Central or a Federal legislation which is entitled, the Charitable and Religious Trusts Act, 1920. Its Preamble states that this is “an Act to provide more effectual control over the administration of charitable and religious trusts”. This further recites the following clause as its Preamble:
“Whereas it is expedient to provide facilities for the obtaining of information regarding trusts created for public purposes of a charitable or religious nature, and to enable the trustees of such trusts to obtain the directions of a court on certain matters, and to make special provision for the payment of the expenditure incurred in certain suits against the trustees of such trusts….”
There are certain States in India, for example, Maharashtra and Gujarat which have the Bombay Public Trusts Act, 1950, whose object is “to regulate and make better provisions for the registration of public religious and charitable trusts”. Under the Bombay Public Trusts Act, 1950, all charitable and religious institutions require registration and also fall under the supervision of the Charity Commissioner of the State. Some of the other States have their own laws, for example, Bihar Hindu Religious Trusts Act, 1950, the Madras Hindu Religious and Charitable Endowments Act, 1959, Madhya Pradesh Public Trusts Act, 1951, Orissa Hindu Religious Endowments act, 1951, Travancore-Cochin Hindu Religious Institutions Act, 1970, Rajashtan Public Trusts Act, 1959, Uttar Pradesh Hindu Public Religious Institutions [Prevention of Dissipation of Properties – Temporary Powers] Act, 1962, Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1966. With reference to Muslims, there are the Wakf Act, 1995, the Mussalman Wakf Act, 1923, the Mussalman Wakf Validating Act, 1913 and the Mussalman Wakf Validating Act, 1930.
An NGO can also be formed as a society under the Societies Registration Act, 1860. Section 1 of this law states that “any seven or more persons associated for any literary, scientific or charitable purpose, or for any such purpose as is described in Section 20 of this Act [the Societies Registration Act], may, by subscribing their names to a memorandum of association, and filing the same with the Registrar of Joint Stock Companies form themselves into a society under this Act.”
A society provides a corporate structure to the NGO; however, the formalities concerning its formation are rather elaborate, as compared with a trust.
The third option for the formation of an NGO is what is popularly described as a “Section 25 company” under the Companies Act, 1956. Section 25 is relevant and is quoted hereafter:
“25: Power to dispense with "Limited" in name of charitable or other company
(1) Where it is proved to the satisfaction of the Central Government that an association:-
(a) is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object, and
(b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members,
the Central Government may, by licence, direct that the association may be registered as a company with limited liability, without the addition to its name of the word "Limited" or the words "Private Limited".
(2) The association may thereupon be registered accordingly; and on registration shall enjoy all the privileges, and (subject to the provisions of this section) be subject to all the obligations, of limited companies.
(3) Where it is proved to the satisfaction of the Central Government-
(a) that the objects of a company registered under this Act as a limited company are restricted to those specified in clause (a) of sub-section (1), and
(b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members,
the Central Government may, by licence, authorise the company by a special resolution to change its name, including or consisting of the omission of the word "Limited" or the words "Private Limited"; and section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21.
(4) A firm may be a member of any association or company licensed under this section, but on the dissolution of the firm, its membership of the association or company shall cease.
(5) A licence may be granted by the Central Government under this section on such conditions and subject to such regulations as it thinks fit, and those conditions and regulations, shall be binding on the body to which the licence is granted, and where the grant is under sub-section (1), shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or partly in the one and partly in the other.
[(6) It shall not be necessary for a body to which a licence is so granted to use the word "Limited" or the words "Private Limited" as any part of its name and, unless its articles otherwise provide, such body shall, if the Central Government by general or special order so directs and to the extent specified in the directions, be exempt from such of the provisions of this Act as may be specified therein.]
(7) The licence may at any time be revoked by the Central Government, and upon revocation, the Registrar shall enter the word "Limited" or the words "Private Limited" at the end of the name upon the register of the body to which it was granted; and the body shall cease to enjoy the exemption granted by this section:
Provided that, before a licence is so revoked, the Central Government shall give notice in writing of its intention to the body, and shall afford it an opportunity of being heard in opposition to the revocation.
[(8)(a) A body in respect of which a licence under this section is in force shall not alter the provisions of its memorandum with respect to its objects except with the previous approval of the Central Government signified in writing.
(b) The Central Government may revoke the licence of such a body if it contravenes the provisions of clause (a).
(c) In according the approval referred to in clause (a), the Central Government may vary the licence by making it subject to such conditions and regulations as that Government thinks fit, in lieu of, or in addition to, the conditions and regulations, if any, to which the licence was formerly subject.
(d) Where the alteration proposed in the provisions of the memorandum of a body under this sub-section is with respect to the objects of the body so far as may be required to enable it to do any of the things specified in clauses (a) to (g) of sub-section (1) of section 17, the provisions of this sub-section shall be in addition to, and not in derogation of, the provisions of that section.]
(9) Upon the revocation of a licence granted under this section to a body the name of which contains the words "Chamber of Commerce", that body shall, within a period of three months from the date of revocation or such longer period as the Central Government may think fit to allow, change its name to a name which does not contain those words; and-
(a) The notice to be given under the proviso to sub-section (7) to that body shall include a statement of the effect of the foregoing provisions of this sub-section; and
(b) Section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21.
(10) If the body makes default in complying with the requirements of sub-section (9), it shall be punishable with fine which may extend to [five thousands rupees] for every day during which the default continues”.
Taxation of NGOs: This is a very vast and complex area and it may be naturally beyond the scope of this Concept Note to elucidate the salient provisions of the Income-tax Act, 1961 insofar as these pertain to NGOs. Briefly stated, an important principle under the Income-tax Act, 1961 is that NGOs in India that have a public charitable purpose are not liable for the payment of income tax, provided certain statutory conditions are fulfilled. The taxation of an NGO formed or created for a charitable or a religious purpose or for the promotion of science, literature, education sports, fine arts is governed mainly by Sections 11, 12, 12A, 12AA and 13 and some clauses of Section 10 of the Income-tax Act, 1961 . NGOs which are not covered under any of these sections are assessable under Section 164.
ROLE OF NGOs IN INDIA ESPECIALLY IN THE AREA OF PUBLIC INTEREST LITIGATION
There has been a plethora of decisions by the Supreme Court of India in the realm of what is popularly described as “Public Interest Litigation”. The role of the NGO as an instrument of reform, a catalyst for change and a key player in the battle for human rights in the jurisprudence of the Supreme Court is central to the development of Public Interest Litigation in India. In Public Union for Civil Liberties vs. State of Tamilnadu and others , the Supreme Court considered the sensitive issue relating to the rehabilitation of bonded labour. The court notes the role of the NGO in the following trenchant quotation :
“In modern days, civil society is playing a greater role in nation-building exercise. The commendable roles played by NGOs in very many situations strengthen the confidence of general public in NGOs. The State may not always be in a position to reach out to the needy. As we have experienced in the past, civil society could efficiently fill up this gap. Now it is time for more interaction between civil society and State machinery in implementing social-service schemes. The services of philanthropic organizations or NGOs could very well be utilized for rehabilitating released bonded labourers. The State could give necessary financial assistance under proper supervision.”
The case of Vishaka and others vs. State of Rajasthan and others is one of the most celebrated cases in India especially in the context of prevention of sexual harassment of working women in the workplace. The Supreme Court has laid down salutary guidelines in this regard. It is equally significant that this case was filed in the Supreme Court by social activists and an NGO, with the aim of “focusing attention towards this social aberration and assisting in finding suitable methods for realization of the true concept of ‘gender equality’ and to prevent sexual harassment of working women in all workplaces through judicial process, to fill the vacuum in existing legislation.”
In Council For Environment Legal Action vs Union Of India a Public Interest Litigation was filed by a registered voluntary organization regarding economic degradation in coastal areas. In this case the Supreme Court issued appropriate orders and directions for enforcing the laws to protect the ecology.
In a recent case that dealt with the laws of surrogacy, Baby Manji Yamada vs Union of India , the Supreme Court considered the case of a habeas corpus petition filed by the petitioner, a surrogate child through her Japanese grandmother. What is interesting in this case is that the Supreme Court noted that there was an earlier writ petition filed by an NGO, called Satya, in the Rajasthan High Court in the form of a habeas corpus petition as well. In the proceedings before the Supreme Court, the Solicitor General took exception to certain statements made in the counter affidavit of Satya, [respondent No. 3 in the petition before the Supreme Court] and urged that the NGO’s stand in the High Court was not in good faith and was not in the public interest. The Supreme Court stated that it did not wish to “go into the locus standi of Respondent No. 3, [Satya], and/or whether bona fides are involved or not.” It disposed of the petition filed by the baby through her grandmother, with certain directions.
The recent judgment in the case of Naz Foundation vs Union of India passed by the Delhi High Court decriminalizing homosexuality, was also filed by an NGO. This has been a path breaking decision, and although a Special Leave Petition has been filed in the Supreme Court of India challenging the judgment, there remains no manner of doubt about the role of the NGO in spearheading this sensitive litigation.
What emerges from the catena of cases decided by the Supreme Court is the fact that the NGOs have galvanized and moved the public conscience of India and have been responsible for bringing about “change” even in the legal jurisprudence of India. These reflect the truth of Mahatma Gandhi’s vision when he spoke those famous words, “Be the change you want to see in the world.”
FUNDING FOR THE NGOs
Funding for the NGOs can be done through grants-in-aid from the Central or State Governments, private institutional support or grants from companies, family foundations, et al. External funding from overseas is reflected in the Foreign Contribution Regulation Act, 1976, which is briefly considered below.
FOREIGN CONTRIBUTION REGULATION ACT, 1976 AND ITS IMPLICATIONS VIS-A-VIS NGOs
The Foreign Contribution Regulation Act, 1976 lays down strict regulations with regard to ‘foreign contributions’ which expression has been defined in Section 2(1)[c] of this law in the following terms:
2(1)(c) "foreign contribution" means the donation, delivery or transfer made by any foreign source,)
(i) of any article, not being an article given to a person as a gift for his personal use, if the market value, in India, of such article, on the date of such gift, does not exceed one thousand rupees;
(ii) (ii) of any currency, whether Indian or foreign-
(iii) (iii) of any foreign security as defined in clause (i) of section 2 of the' Foreign Exchange Regulation Act, 1973; (46 of 1973.) Explanation.-A donation, delivery or transfer of any article, currency or foreign security referred to in this clause by any person who has received it form any foreign, source, either directly, or through one or more persons, shall also be deemed to be foreign contribution within the meaning of this clause”.
The expression, “foreign source” has also been defined in the following terms:
2(1)(e) "foreign source” includes-
(i) the Government of 'any foreign country or territory and any agency of such Government,
(ii) any international agency, not being the United Nations or any of Its specialised agencies, the World, Bank, International Monetary Fund or such other agency as the Central Government may, by notification in the Official Gazette, specify in this behalf,
(iii) a foreign company within the meaning of section 591 of the Companies Act, 1956, (1 of 1956.) and also includes- (a) a company which is a subsidiary of a foreign company, and (b) a multi-national corporation within the meaning of this Act,
(iv) a corporation, not being a foreign company, incorporated in a foreign country or territory,
(v) a multi-national corporation within the meaning of this Act,
(vi) a company within the meaning of the Companies Act, 1956, (1 of 1956.) if more than one-half of the nominal value of its share capital is held, 'either singly or in the aggregate, by one or more of the following, namely: - (a) Government of a foreign country or territory, (b) citizens of a foreign country or territory, (C) corporations incorporated in a foreign country or territory, (d) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory,
(vii) a trade union in any foreign country or territory, whether or not registered in such foreign country or territory,
(viii) a foreign trust by whatever name called, or a foreign foundation which is either in the nature of trust or is mainly financed by a foreign country or territory,
(ix) a society, club or other association of individuals formed or registered outside India,
(x) a citizen of a foreign country,
but does not include any foreign institution which has been permitted by the Central Government, by notification in the Official Gazette, to carry on its activities in India”
The most important section in the present context is Section 6 of the Foreign Contribution Regulation Act, 1976, which is relevant for an NGO. It is quoted in its entirety:
6 Certain associations and persons receiving foreign contribution to give intimation to the Central Government.
1[(1) No association [other than an organization referred to in sub-section (1) of section 5] having a definite cultural, economic, educational, religious or social programme shall accept foreign contribution unless such association,-- (a) registers itself with the Central Government in accordance with the rules made under this Act; and (b) agree to receive such foreign contributions only through such one of the branches of a bank as it may specify in its application for such registration,
and every association so registered shall give, within such time and in such manner as may be prescribed, an intimation to the Central Government as to the amount of each foreign contribution received by it, the source from which and the manner in which such fore such foreign contribution was received and the purposes for which and the manner in which such foreign contribution was utilised by it:
Provided that where such association obtains any foreign contribution through any branch other than the branch of the bank through which it has agreed to receive foreign contribution or fails to give such intimation within the prescribed time or in the prescribed manner, or give any intimation which is false, the Central Government may, by notification in the Official Gazette, direct that such association shall not, after the date of issue of such notification, accept any foreign contribution without the prior permission of the Central Government.
(1A) Every association referred to in sub-section (1) may, if it is not registered with the Central Government under that sub- section, accept any foreign contribution only after obtaining the prior permission of the Central Government and shall also give, within such time and in such manner as may be prescribed, an intimation to the Central Government as to the amount of foreign contribution received by it, the source from which and the manner in which such foreign contribution was received and the purposes for which and the manner in which such foreign contribution was utilised by it.]
(2) Every candidate for election, who had received any foreign contribution, at any time within one hundred and eighty days immediately preceding the date on which he is duly nominated as such candidate, shall give, within such time and in such manner as may be prescribed, an intimation to the Central Government as to the amount of foreign contribution received by him, the source from which and the manner in which such foreign contribution was received and the purposes for which, and the manner in which, such foreign contribution was utilised by him.”
There are also special rules, entitled, the Foreign Contribution (Regulation) Rules, 1976, which accompany the above law and are helpful in laying down the procedure for the implementation of the Act.
FINANCIAL ACTION TASK FORCE [FATF] AND INDIA
PREVENTION OF MONEY LAUNDERING ACT, 2002
While it is beyond the scope of this Concept Note to discuss in detail the implications of FATF and India, it may just be worthwhile briefly adverting to this very significant international body. FATF is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing. The FATF is therefore a 'policy-making body' created in 1989 that works to generate the necessary political will to bring about legislative and regulatory reforms in these areas.
India is a Member of the APG (the Asia Pacific Group on Money Laundering), a FATF-style regional body. India is working with the FATF towards becoming a FATF Member. India became an FATF Observer in February 2007.
India has the Prevention of Money Laundering Act 2002, whose object is described in its Preamble as “An Act to prevent money laundering and to provide for confiscation of property derived from or involved in, money-laundering and for matters connected therewith or incidental thereto”. It has recently been amended by the Amendment Act No. 21 of 2009. The Reserve Bank of India, has, on 22nd December 2009 issued stringent guidelines, appended below which set out inter alia the RBI’s concerns and efforts to combat the financing of terrorism.
CONCLUSION: IS THE ROLE OF THE NGO CRITICAL IN INDIA?
Undoubtedly, in a country that is replete with paradox and enigma as is India, the NGO retains a crucial and critical role. In a speech delivered at a conference of the Asia Pacific Jurists’ Association, former Chief Justice of India, Justice Y K Sabharwal has pithily summarized the role of the NGO in the following passage, which is quoted hereafter :
“The emergence of NGOs represents an organised response by the civil society, especially in those areas in which the State has either failed to reach or done so inadequately. The importance of Public Awareness and NGOs involvement in environmental protection is acknowledged worldwide. It was also highlighted in Rio-Conference in 1992. UNCED supported NGO involvement in an unprecedented manner.
On 29 April 1999, the United Nations Secretary General, Kofi Annan, while addressing the NGOs Forum on Global Issues, specifically recognized the importance and role of NGOs and said that NGOs have a long and proud history of fighting against tyranny and providing humanitarian assistance to the victims of conflict and natural disasters. NGOs armed with e-mail and Internet have been proved more powerful than landmine. The Nobel Committee has recognized their work, awarding its peace prize to NGOs, the Church and academic groups and others. But NGOs have also come in for a less welcome sort of recognition. They have been denied access to meetings and information.
NGOs have been taking a number of steps to promote discussion and debate about environmental issues, outside the broad spheres of popular media and the educational system. Advocacy and awareness is especially crucial in promoting concepts such as sustainable development, natural resource conservation and the restoration of ecosystems. NGOs can sensitize policy makers about the local needs and priorities. They can often intimate the policy makers about the interests of both the poor and the ecosystem as a whole. In providing training facilities, both at community and government levels, NGOs can play a significant role. They can also contribute significantly by undertaking research and publication on environment and development related issues. It is necessary to support and encourage genuine, small, local level NGOs in different parts of the country which can provide much needed institutional support specific to the local needs. NGOs can make the following contributions:
conducting education and citizen awareness programmes in the field of environment;
fact-finding and analysis;
filing public interest litigations;
innovation and experimenting in areas which are difficult for government agencies to make changes in;
providing expertise and policy analysis
providing factual and reliable information with a network of professional expert staff;
remaining independent while passing relevant information to the public and governmental bodies;
solidarity and support to environmental defenders;
working in collaboration with the government for capacity building and promotion of community participation in environmental awareness and protection; and
working out at the grassroots level and reaching far-flung areas with or without the government invitation.”
In the ultimate analysis, India needs NGOs to keep a watchful and vigilant eye on the growth of this economic and political giant called India, a country that is undoubtedly a world player in the 21st century. To echo the sage words of our venerable Mahatma Gandhi, the NGOs represent the “change” that we wish to see in the world, and especially in India.
