Philanthropic Freedom – Civil Society Regulation in India

Amid India’s recent economic boom is a series of striking social crises with respect to troubled labor law, sexual violence against women, prevailing corruption and so forth.  Confronting these mounting challenges, India’s civil society is always at the frontier of defending human rights and pushing the administration for deeper reforms.

The prosperity of the Indian civil society is also acknowledged in “Philanthropic Freedom”, a preliminary study on civil societies in 13 countries – both developed nations such as U.S and emerging economies like India and Brazil, conducted by the Center for Global Prosperity of Hudson Institute, a prestigious U.S think tank .  The study examines countries’ philanthropic freedoms in terms of civil society regulation (rights to associate and register a CSO, etc.), domestic tax regulation on donations, and cross-border flows regulation on individuals and organizations sending donations abroad and CSOs receiving funding from overseas. The countries are scored from 1-5 according to their individual civil society performance in each aforementioned area.

As a vast culturally diverse nation with approximately 1.2 billion people, India lately became a middle-income country according to the World Bank, while it still has considerable space to improve in terms of governance, transparency and social equity. Among the eight emerging economies featured in the study, India enjoys a fairly free civil society, ranking the third with an overall score of 3.8 slightly below Mexico and South Africa, which score 4.1 and 3.9 respectively. Nonetheless, the developed countries such as Netherlands (4.8) and U.S (4.6) exceed their developing counterparts in overall civil society environment.

The study also notes that, in India, the legal definition of “civil society” lacks inclusiveness that the relevant laws only refer CSOs to organizations with “Charitable Purpose”. Whereas, philanthropy covers a broad spectrum of development activities including not only “giving money”, but also research, technological innovation and grassroot advocacy.

Accordingly, India currently has about 3.3 million registered CSOs, although only about a million are estimated to be active. Regarding of civil society regulation, the country scores 4 out of 5 with respect to fairly easy registration, less governmental interference in governance and judicial oversight over involuntary dissolution for CSOs. On the other hand, the CSO registration process can sometimes take months due to bureaucratic inefficiencies. In addition, Indian CSOs have free access to Internet and other communication technologies unlike some other emerging economies such as China and Russia where Internet is still heavily censored by the governments.

Furthermore, a fair tax deduction rate for cash donations is granted upon Indian citizens and companies, while in-kind donations are not covered. Such tax system creates more incentives for like-minded individuals and corporations to engage in philanthropy and help foster the country’s civil society as a whole.

By contrast, the country merely scores 3.5 in terms of cross-border flow regulation, dragging its overall score behind. The study argues that in India, donating money abroad is still under heavy overhaul of the Reserve Bank of India. CSOs with political activities are not qualified to receive international funding. Moreover, the Foreign Contributions (Regulation) Act, which deprives NGOs of right to receive foreign donations under certain circumstances, shows a stronger stance of Indian government to limit the activities of civil society.

In general, the study further demonstrates the robustness of civil society in India. Domestically, the Indian CSOs and activists have fought for banning child labor and stricter laws punishing sexual harassment against women; internationally, they have represented people from discriminated scheduled castes at the United Nations, influencing governments in South Asia to lift social and economic barriers restricting the marginalized.

Despite the aforementioned deliberations, many argue that the majority in India do not think the Indian CSOs are transparent enough as the study points out. Alternative media has also voiced concerns about corruptions among NGOs in the country. These issues will only cost civil society’s credibility and hamper its further development if the situation continues to deteriorate.


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