There are two separate but linked questions about India's NGO policy

It's shameful that Indian organisations can't, or won't, donate to NGOs.

On Christmas Day, the government withdrew the license given to Mother Teresa’s charity to receive funds from abroad. The reason was some bureaucratic non-compliance. The government said it was because of ‘adverse inputs’ about the organisation. 

One report suggested that there was a complaint in Gujarat that one of the branches of the charity was trying to convert young people to Christianity. 

India has several thousands of NGOs. Many of them receive funding from abroad under the Foreign Contributions Regulation Act (FCRA). 

Around 6,000 of them, say newspaper reports, have just had the pleasure of being told by the government that they can no longer receive such funding because they hadn’t met their regulatory obligations by the specified date. 

Many well-known organisations are included in the list, like Oxfam, Missionaries of Charity (Mother Teresa), Common Cause, Indian Medical Council, and even the Nuclear Science Centre at JNU! These are amongst the most influential ones. So there is bound to be a great deal of fuss about how ‘civil society’ is being strangled. 

The ‘liberal’crowd will says this is “murder of democracy”. The government will say it has to safeguard the national interest. 

This ding-dong battle has been going on ever since the FCRA was enacted in 1976. Neither side has changed the script much since then. 

The sums involved are not enormous from the donors’ point of view. The last mentioned official figure for total inflows to all NGOs was Rs 51,000 crore. Much of this money, it appears, comes from the US. That could be because US law requires charitable trusts to spend 5 percent of their income on “good works”. 

But from the receiver's point of view the receipts can often make the difference between life and death. So many NGOs are now going to have to shut down.  

That’s as it may be because what the government says is not without justification, that often the real donor is hidden behind many screens and the NGO is violative of its promises. Truth be told, the NGO world is murky and opaque. 

Overall, therefore, no one knows exactly what the reality is. As often happens in such episodes, both sides are guilty of being less than economical with the truth or exaggeration. Governments hold all the trump cards. 

Strangely, however, the debate on the subject, over the last 40 years, has only been over the symptoms. The underlying malaise has seldom been talked about. 

For this to happen it is necessary to explicitly recognise that there are two separate but linked questions about NGO policy. 

One is the need for NGOs. The other is their funding. The two are, in a manner of speaking, like complementary goods. The second arises because the first is there. 

There are three ways of approaching the problem. One is to ban all NGOs. Many countries do that. But this is a very bad solution. 

The second is to allow NGOs but limit them to just two specific areas: primary health and school education. Foreign funding would be ok in these areas because this is where the need is maximum and where the governments have failed. 

The third solution is to allow NGOs in all fields but ban all foreign donations. NGOs must get their money from Indian sources only. 

This is not unreasonable. It’s shameful that Indian organisations can’t, or won’t, donate. 

The private sector in particular is especially guilty. It donates generously to political causes but not to other NGOs. 

Simultaneously, the exemption given to political parties to freely receive foreign funds must be wholly withdrawn. This exemption is shocking. No other well-governed country allows this.