The Government’s Favourite New Weapon Against Activists

The Indian government is increasingly using the bogey of foreign funding to shut down dissenting NGOs and people’s movements. At the same time the government is chasing Foreign Direct Investment and not holding the companies to the same ‘patriotic’ standards.

In Stanley Kubrick’s classic Cold War comedy Dr. Strangelove: Or How I Learnt To Stop Worrying And Love The Atomic Bomb, Peter Seller’s eponymous character suffers from a rare condition called the ‘alien hand syndrome’. People suffering from this condition believe (wrongly) that their hand is being controlled by a foreign or alien entity. 

Those who follow international politics might have observed a similar condition affecting our political leadership. Common amongst authoritarian regimes threatened by protests or public mobilisation, this ‘foreign hand syndrome’ has reached epidemic proportions in recent years. You can see it in action, for example, in Russia, where a law passed last year requires NGOs involved in political activities that receive foreign funds to register themselves as ‘foreign agents’, which in the Russian context means ‘spy’. 

Another example is Egypt, where five foreign NGOs, including US-based think tank Freedom House, had to shut down their offices. 43 employees of foreign NGOs, including 16 Americans, were handed jail sentences for illegally receiving foreign funding and ‘fomenting unrest’ in the country. 

There are also concerns about a draft law that prohibits NGOs from all political activities including public policy advocacy. It requires advance approval from the government for practically everything – from receiving foreign donations and collaborating with foreign organisations to soliciting donations from Egyptian individuals. It even allows the administration to interfere in the internal affairs of NGOs, just to remind everyone of who’s really in charge.

In both countries, the crackdown on NGOs followed massive public protests against governments with dubious records on transparency and human rights. 

India is not immune to this affliction. In an interview with Science magazine last February, Prime Minister Manmohan Singh blamed protests against nuclear energy and GM food on NGOs funded from the US and Scandinavian countries. A month later, the central government cracked down on four NGOs in Tamil Nadu for allegedly funding the massive protests against the nuclear plant in Koodankulam. For a second act it prohibited over 4,000 NGOs from receiving contributions from overseas. 

It took these actions under the Foreign Contribution (Regulation) Act, which dates back to 1976 and the height of ‘foreign hand’ paranoia during Indira Gandhi’s Emergency. That old bogeyman has now been resurrected.  

Of course, there are legitimate concerns about foreign agencies using NGOs to push their own agendas. But is the FCRA an appropriate response, or is it yet another way for the government to clamp down on political dissent?  

The original Foreign Contribution (Regulation) Act (1976) was enacted to regulate foreign contributions to non-profit organisations, and to ensure that this money wasn’t utilised for activities prejudicial to the national interest. 

In its essence, it had two functions – to keep track of foreign money coming into the non-profit sector, and to ensure that none of this money was making its way to political organisations, government servants or those in the news media. You can get a hint of the reasoning behind law by the fact that it specifically mentions political cartoonists, who are, of course, prime targets for recruitment by the CIA. 

Complex and unnecessarily strict to begin with, the act became hopelessly out of date in the years post liberalisation. After the Prevention of Money Laundering Act was introduced in 2002, many argued that the FCRA had outlived its usefulness and should be scrapped. 

The government finally got around to updating the act in 2010, but any hopes of more liberal regulations were soon dashed. In fact, the new law makes things even more difficult for NGOs. 

Civil society and rights advocacy groups are now particularly vulnerable, thanks to Rule 3 of the Foreign Contribution Regulation Rules (2011) which specifies the grounds on which an organisation could be regarded as a political organisation. These include having “objectives of a political nature”, participation “in political activity” and employment of “common methods of political action… [such as picketing, strikes, rasta roko, etc.]… in support of public causes.” 

While the earlier act only put restrictions on those involved in electoral politics, this new definition is so broad and vague that practically anything could be used to justify punitive action. After all, when you’re dealing with rights and public policy, what cannot be classified as political activity? 

In a country where activists are regularly targeted by the police and peaceful protesters are charged with sedition, these rules fuelled concerns that the government could use the FCRA to curb political dissent. And those fears were not unfounded. 

Of the over 4,000 FCRA licenses suspended last year, most were for procedural reasons. But there were also over a number of organisations that had their accounts frozen and licenses suspended because their activities were found to be against the national interest. 

These include the NGOs linked with the Koodankulam agitation (which is still going strong, so perhaps it wasn’t just foreign money that motivated the protests). But perhaps the most egregious example of the government misusing the FCRA is the case of INSAF (Indian Social Action Forum).

INSAF is a membership based forum of 700 organisations around India with a focus on grassroots movements involved in struggles against mining corporations, nuclear plants and genetically modified (GM) foods. It acts as a network for social activists and regularly organises campaigns, workshops, conferences and public hearings on issues related to globalisation, communalism and erosion of democracy. 

Long before their own FCRA licence was suspended, INSAF was the first organisation to file a legal petition against the new FCRA rules in August 2011, challenging the constitutional validity of the sections relating to political organisation. When Prime Minister Manmohan Singh criticised foreign-funded NGOs for fuelling the Koodankulam protests, INSAF was quick to condemn the statement. 

Early in May 2013, the group was busy with a protest against Asian Development Bank (ADB), parallel to the latter’s Annual General Meeting in Noida, when they found that their bank accounts had been frozen. The notification from the Ministry of Home Affairs (MHA) explained that their FCRA license was suspended because their actions were ‘prejudicial to the national interest’. No further details were given. 

INSAF co-ordinator Wilfred D’Costa was not surprised. He says: “Ever since the meeting where we condemned the PM’s statement, a number of our members have been interviewed by intelligence people. For the past one year, they’ve been tracking us and trying to find evidence of wrongdoing. But we’re not worried, our accounts are in order and we’re very transparent.” 

D’Costa believes that the notification was prompted by the group’s criticism of the government, and the fact that its president, Prasanta Paikray, is the spokesperson for the eight-year-old movement against South Korean steel company POSCO’s proposed plant in Odisha, the single biggest Foreign Direct Investment (FDI) in India. The proposed project would be the single biggest Foreign Direct Investment (FDI) in India, and the strong resistance by locals at the POSCO site must have caused a few sleepless nights in New Delhi. 

INSAF’s situation is the very scenario that critics of the law have been afraid of. Without a clear definition of what constitutes political activity, any criticism of the government or its policies can be used as grounds to freeze bank accounts and revoke FCRA licenses. Any rights-based mobilisation can be an offence under the law, and even raising awareness about rights can land an organisation in trouble. In other words, to be a rights advocacy NGO is to invite punitive action under FCRA. 

“When the Home Ministry explained the law at one of the forums they organised in 2010, the officers said you can do dharnas but don’t use foreign money,” says D’Costa. “We argued that even if we only use Indian money, or no money, you still can call us a political organisation and disbar us from receiving foreign funds. It basically leaves you vulnerable to the whims of any officer in the FCRA department.”  (The Ministry of Home Affairs did not respond to requests for comment.)

There is an unsurprising lack of transparency in this law that ostensibly exists to ensure transparency of non-profit organisations. “If the government has evidence of wrongdoing, it should make it public and prosecute the guilty,” adds Jayant Kumar, Chairman of Voluntary Action Network India (VANI), an apex body of voluntary organisations that regularly lobbies state and central governments. 

“But no charge sheets are ever filed because this way there is no definition of what is a political activity. That definition will only come if the High Court or Supreme Court rules on a case and the government doesn’t want that to happen.” Recognising this, VANI is lobbying for the repeal of the rule regarding political organisation and for the establishment of a mechanism for negotiation between the government and the voluntary sector. 

Revoking the license is only one of the ways the FCRA allows the government to intimidate NGOs. There’s also the routine harassment under the guise of inspections by the Intelligence Bureau (IB). If you’re a rights advocacy or civil society group working in Adivasi areas, or are too vocal in your opposition to the State, expect regular visits from your local IB officer. 

“Even earlier in the 90s, when I worked with an NGO here, we had the IB person coming every month and having talks with us,” says Jharkhand-based social activist Xavier Dias. “IB had only three people in their office here, but every month one of them would come and breathe down our necks.”

That policy of intimidation by the IB is still in place. One Bangalore-based organisation has received five visits in the past two months, with constant questions about their agenda and motives. A number of big, reputed organisations are facing similar harassment. Despite acknowledging this fact privately, none of them were willing to go on record. 

That could, of   course, indicate that there is some truth to the IB’s accusations. Or it could mean that the intimidation is working. With the new requirement that NGOs must renew their FCRA registration every five years, being too outspoken could lead to unexpected problems the next time you approach the MHA or your local district collector for the necessary clearances.

Of course, the MHA seems to have no problems with foreign contributions when the money is flowing into the coffers of political parties, who are explicitly prohibited from receiving foreign money under both the FCRA and the Representation of the People Act (1951). 

An investigation carried out by the Election Commission last year found that both the Congress and the BJP had received donations of Rs 5 crore each from two subsidiaries of the UK-based Vedanta Group, in clear violation of the FCRA. This is the same Vedanta Group whose proposed mining project in the Niyamgiri hills of Odisha is at the centre of a decade-long struggle waged by the Donghria Kondh tribals. The Election Commission notified the MHA of its findings last October, but no notices have been issued to either party so far

But NGOs are not political parties. As long as the FCRA exists in its current form, they will remain vulnerable to coercion and punitive action from the government. Whatever the government’s justifications, the law is undemocratic and gives the state too much leeway to curb political dissent. In fact, when the UN Special Rapporteur Margaret Sekaggya observed that the FCRA was open to abuse by the authorities, even the government admitted that it “may be abused by authorities involved, in the execution of such laws”.

While VANI is lobbying for more transparency and the repeal of the rule that mentions political organising, others question the need for such a law in the first place. 

“In a globalised world there is no place for FCRA,” says Suhas Chakma, Director of the Asian Centre for Human Rights (ACHR). “At the same time as you’re restricting contributions to NGOs, you’re allowing more and more investment in business and media. So you’re worried about a media person receiving foreign funds while reporting about Koodankulam [hence the FCRA] but you want to allow 49% FDI in media.”

Chakma is making a sharp point here. The government’s efforts to restrict foreign funds for NGOs are completely at odds with its push for the liberalisation of India’s industries. The approximately Rs 10,000 crore per annum that comes in as foreign contributions to civil society organisations is a pittance when compared to the money coming in through FDI or other investment routes.  

But the government isn’t concerned with the latter’s influence on public policy or public opinion, even though many of these investors have their own agendas and are obviously more concerned with profits than with India’s national or strategic interests. 

Take, for instance, the $11.2-billion Vedanta Group. It is allowed to create Indian subsidiaries to disburse funds, lobby the government for favourable policy outcomes and hire PR agencies to spin media coverage in its favour. 

It can even cosy up to the media by funding CSR initiatives such as the ‘NDTV-Vedanta Our Girls Our Pride’ campaign - conveniently announced at the same time as Dongria Kondh villagers were voting against Vedanta at a referendum on its proposed mining project. But if an international human rights organisation points out rights violations and lapses in procedure, that is treated as a threat to the national interest.

“It is so common to say that NGOs are corrupt, even people with no experience in the sector keep repeating that,” says Anshu Gupta, founder-director of Goonj (which focuses on reaching essentials like clothing, sanitary pads to the rural poor and is currently one of the hubs of relief work in Uttarakhand). “But if you put together all the fraud in the entire NGO sector, it won’t equal one Satyam.”  

Activists admit that there are valid concerns about transparency and national security, but argue that there are already enough laws to take action against offending organisations. They believe that there is no justification for the differentiation between non-profit contributions and for-profit investment. If regulation under the Foreign Exchange Management Act (FEMA) is good enough for MNCs, it should be good enough for NGOs. 

“The RBI already has records of who’s giving the money and who’s receiving it,” says Sreedhar Ramamurthi, Chairperson of Mines, Minerals & People. “The banks are required to report foreign transactions and now organisations have to report foreign contributions in their income tax returns as well. The FCRA’s intent is not to manage finance but to manage politics.”  

Suhas Chakma scoffs at the government’s newfound commitment to transparency in the NGO sector. He points to widespread discrepancies in NGOs that receive funding and grants from the government.  

A recent report by the ACHR found that at least Rs. 1000 crores of taxpayer’s money gets wasted every year thanks to irregularities in the process for awarding grants. It pointed out that in many cases NGOs close to government officials or with political connections are selected for grants ahead of more credible organisations, and in some cases of NGOs received money despite being blacklisted for irregularities.

“The CAG also released a report on this scam, but no action was taken,” says Chakma. “So the government’s worry about corruption and money laundering in NGOs receiving foreign funding sounds hollow. In the end, they’re only hurting legitimate NGOs which are doing excellent work, not just in rights and advocacy fields but also in many other areas.”

The same goes for national security concerns. There are enough laws that allow the government to catch and punish anyone funding insurgent or terrorist groups. Besides, these groups rarely get their money from legitimate NGOs receiving money through legal means. 

Instead they prefer the hawala route. In the case of the Naxalites, they can get much more money from large corporations in return for access to resources or as protection money. See, for example, the Essar Steel employees who were arrested for allegedly paying off Naxalites in Chhattisgarh’s Dantewada district. 

“Ultimately they don’t want NGOs to survive as independent [entities] they want them to function as an extension of the government,” says D’Costa. “They want NGOs to do the public service and development work that the government is supposed to do, while keeping out the troublesome ones like us who challenge policy and do advocacy work.” 

INSAF and others are working hard to get the FCRA repealed or diluted. But the government is still reeling from recent challenges to its authority – from Anna Hazare’s massive anti-corruption drive to protests against land acquisition all over the country. And perhaps its easiest response is to clamp down on those it holds responsible for this upsurge in dissent. Any changes to the FCRA will require a major political shift. Till then, civil society NGOs will just have to cope.  

“The next 10 years look very bleak,” says Lawrence Liang, co-founder of the Bangalore based Alternative Law Forum (ALF), an organisation that integrates legal advocacy with critical socio-political research. ALF has done important work in fields such as human rights, women’s rights and LGBT rights, intellectual property, labour law, and censorship.  

Liang points out that most of the money coming in through FCRA goes to religious and cultural groups, with only a small percentage going to civil society organisations. This share of the pie has been in decline over the last decade as human rights and social change donors get frustrated with the bureaucratic red tape and shift their attention to more needy countries in Africa and East Asia. The ongoing economic crisis has accelerated this trend. And the new restrictions have made things even worse. 

“The FCRA is also making it more difficult for foreign donors and sometimes telling them not to give funds to rights advocacy NGOs,” adds Liang.

Civil society NGOs are stretching their already meagre resources as far as they can. They operate on low overheads and most pay lower salaries than charitable or religious/cultural NGOs. In this scenario, even a temporary suspension of their FCRA license can be a disaster.  

“It’s already tough doing this kind of work,” says Liang. “The moment FCRA is revoked or accounts frozen, you can’t keep the people who were working with you. It takes months to get the suspension overturned, if you can, and by then you have to start all over again.”

And it’s not just the organisations receiving foreign funds who suffer. The money coming in goes towards building capabilities and infrastructure that also supports other organisations. ALF shares its office space with smaller community-based organisations such as the local sex workers’ union and the sanitation workers’ union, the Pourakarmikara Sangha. 

INSAF’s South Delhi office acts as a resource hub for grassroots organisations all over the country – many of whom support protests and people’s movements in Koodankulam, Niyamgiri and elsewhere. Its conferences are a platform for activists from all over the country to come together and learn from each other. These networks of mutual support and encouragement are threatened by the FCRA. 

“Earlier, NGOs would offer support and provide me with office space for big meetings,” says Vidya Dinker, convener of the Citizens Forum for Mangalore Development, an entirely voluntary organisation that receives no funding. “But now because my work can be considered political, that support has stopped because their FCRA license is threatened.” 

If organisations like ALF and INSAF are forced to shut down or curtail their work, a large number of activists, grassroots organisations and marginalised groups will lose out on support and resources they desperately need.  

The situation is also making NGOs look seriously at funds within a country that doesn’t have much of a philanthropic tradition outside the religious, or obvious service delivery contexts. One of the major success stories when it comes to domestic funding is Greenpeace India. 

The organisation gets the majority of its money from within the country, with only 30% of the funds coming from abroad. They have a dedicated call centre that contacts supporters for their fundraising campaigns and you can often find Greenpeace volunteers on the streets, spreading awareness and soliciting donations.

“India has enough potential as a market for NGOs and civil society organisations,” says Binu Jacob, Supporter Services Manager, Greenpeace India. “But NGOs need to raise the bar when it comes to marketing. They need to spend time and effort towards finding donors.” 

Then there’s, a new multi-issue advocacy group (aiming to hold political, corporate and cultural leaders accountable by using technology to facilitate public mobilisation) that raised $25,000 through an online crowd-funding campaign. 

And ALF has started reaching out to National Law School alumni for donations in an effort to wean itself off its dependency on foreign funds. But it isn’t easy going. Not every organisation has the necessary resources to invest in marketing and publicity, or access to networks of well-heeled individuals who can be tapped for donations. 

“You need investments to raise investments,” says Ramamurthi of Mines, Minerals and People. “If you’re a small organisation that can’t put a lot of money into raising your public profile, then finding enough donors in India becomes almost impossible.” 

Besides, domestic donors prefer to send their money to charitable or public service organisations trying to plug in the holes in our social welfare net such as Helpage India and Give India. Indian donors are also wary of advocacy groups, in no small part due to the accusations of anti-national activities that the government trots out every time an NGO questions its policies or supports a protest against a pet project. Many buy into the narrative that all civil society NGOs are anti-development. 

There are signs that this is changing. The support for the civil society-led Anna Hazare campaign, and now the Aam Aadmi Party shows that a new generation of youth is more worried about corruption and the breakdown of the rule of law than they are about foreign conspiracies. But this is a slow process and in the meantime the space for civil society is shrinking, and along with it the space for legitimate, non-violent dissent. 

Bhanuj Kappal is a freelance journalist who writes about music, art and cultural politics. Follow him at


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