Foreign Aid for Indian NGOs

Problem or Solution?

Pushpa Sundar

• Publisher: Routledge India
• Year: 2020
• Topic: Politics & International Relations
• eBook ISBN:
  9781000083828
• Subtopic: Development Economics
• Index: Politics & International Relations

This book explores what difference development aid has made to the size, complexity, style of functioning, values and future direction of the NGO sector in India. It does this, first, by giving a comprehensive documentation of the experience of Indian NGOs with foreign aid since Independence. Simultaneously, it also analyses, in a broad historical perspective, some of the issues which are the subject of contemporary debate regarding the voluntary sector and aid, such as who decides 'what' is development and 'how' it should be brought about; whether foreign donors have hidden agendas, and if their aid amounts to cultural imperialism; and whether aid has made NGOs more self-reliant.

The book also looks at the tripartite relationship between NGOs, donors, and governments, examining, for instance, whether the government is justified in imposing restrictions on receipt of funds by NGOs on the grounds that terrorist activities and religiously motivated communal strife are often financed with funds from abroad, with NGOs being used as fronts for both.

1
Introduction

‘He who imagines he can do without the world deceives himself much; but he who fancies the world cannot do without him is still more mistaken.’

La Rochefoucauld

It is not usual to begin a book by saying what it is not. But I plead a precedent in Indian philosophical enquiry which explores the Ultimate Reality by saying Neti Neti, it is not this, not this. In similar vein, this book is not (entirely) about the excesses of international aid — the freewheeling lifestyles of aid bureaucrats in the midst of poverty, commitments made and broken, and the power, prestige and corruption of the multi-billion dollar aid business. Nor is it about the blessings conferred by aid on recipient nations who ought to be grateful but not always are. Both have been competently chronicled elsewhere. It is also not concerned (except indirectly), with the big questions of aid — whether it has helped reduce levels of poverty and inequalities of wealth and power, or whether the models of development adopted have been appropriate or not.

Instead, it addresses the narrower question of whether, and how, development aid has shaped the nature and growth of nongovernmental organizations (NGO) or the voluntary sector in India. It explores what difference development aid has made to the size, complexity, style of functioning, values, and future direction of the sector, and the impact it has had on its relationship with government and business. At the first level, it is a documentation of the Indian NGOs’ experience with foreign aid between 1960 and the present — the why, who, how much, and how of foreign development assistance. But simultaneously it also seeks to analyse some of the issues which are the subject of contemporary debate with regard to aid to NGOs.

Four reasons have prompted the book. One, as is elsewhere in the world, NGOs have become a force to reckon with in India. Two, a major factor contributing to this development has been the increase in external resources available to them. Three, there has been a dynamic evolution of both the NGO sector and foreign aid since aid first started in the 1960s. Both aid and the voluntary sector have beeen transformed due to globalization and other factors, but also due to interaction between the two. This has led to much debate on the role, quality, and practices of aid and aid givers. The time is thus opportune to see the issues in a broad historical perspective, and to learn from hindsight in order to meet the challenges of the future. Finally, given that the source and nature of resources raised by an organization drive and shape organizational growth, surprisingly little attention has been paid in scholarly or popular writing to the relative importance of this source compared to other sources, at least for India, especially since aid has aroused debate and passions quite out of proportion to the monies involved.

THE RISE AND RISE OF NGOs

No discourse on poverty, development, globalization, democracy, or governance is today complete without the term ‘NGO’ figuring in it. The term refers to a wide range of value-based, non-profit organizations, independent from government, engaged in social action and development ‘to relieve suffering, promote the interests of the poor, protect the environment, provide basic services, or undertake community development.’¹ Popularly, the term used in India for such organizations was, and continues to be, ‘voluntary agency’, or ‘voluntary organization’, meaning primarily charitable and welfare oriented, relief and rehabilitation type of organizations run by people who give their services voluntarily and do not receive compensation. In development discourse, however, the term NGO is more popularly used. First used in the UN system in the context of poverty removal and disaster relief, it has passed into common parlance, its usage broadened over time to include other issues such as environment, human rights, governance, women’s rights, and status of Dalits² in society. One of the major goals of NGOs is to protest or redress some injustice or deficiency in service on the part of either government or business.

¹ This is the definition of NGO used by the World Bank, in Operational Directive 14.70, ‘Nongovernmental Organizations and Civil Society/Overview’. Available at the World Bank website: http://wbln0018.worldbank.org/essd/essd. nsf/NGOs/home.

² The term Dalit is today the preferred term for the outcastes of Hindu society, formerly called Harijans or children of God, a name given to them by Mahatma Gandhi.

The global growth of NGOs, or civil society as they are sometimes referred to in the collective, is said to rank as one of the outstanding developments of our time. They are said to have majorly contributed to such world changing events as the demise of colonialism, dismantling of Apartheid, the disintegration of the Communist Bloc, and, within India, the lifting of the national Emergency.

Fifty years ago, NGOs had little place in public consciousness. There has been a sea change since. NGOs have now become major players both in the global and national arena, being called upon to play new roles both at the national level as well as the international level. At every major global conference, NGOs from across the world are either protesting the policies of global institutions like the World Trade Organization (WTO) in the streets or sharing the conference table along with government delegates, as at the UN-sponsored conference on Climate Change in Bali.³ And Indian NGOs and their leaders are right there among other members of the global civil society, or government delegates.

³ News item in Mail Today, New Delhi, 18 December 2007, p. 10.

Within India, the word ‘NGO’ figures regularly in connection with an incredibly wide variety of issues of public interest, ranging from pushing for withdrawal of unapproved and harmful drug combinations, to protesting state-sponsored private vigilante movements polarizing tribal society, or moral policing of couples in parks.

NGOs are much sought after by both government and business. Recently, the Vaidyanath Aiyar Committee, reviewing the training of the Indian Administrative Service (IAS) officers, recommended that they serve a period of internship with an NGO as part of their training. Courses on NGOs have also entered business school curricula. In short, NGOs play an increasingly active role in today’s political and social life, both at the global, national and grass-roots level, and wield great influence on development. They are considered an indispensable third leg of the three-legged stool, of which government and business are the other two.

Nothing pronounces the fact that NGOs have ‘arrived’ more than the fact that they have become the subject of satire as well as invective. A recent article lampooned NGO activists, or the ‘jholawalas’, as they are called in jest, because of the ubiquitous ‘jhola’ or cloth bag slung over the shoulder to complete their attire of pajama-kurta and open sandals. It noted the change in their humble demeanour by remarking, ‘They used to call us jholawallahs, derision and ridicule were our lot, we were accused of slowing down the revolution — but 2007 will always be remembered as our year.’⁴

⁴ Aditi Phadnis, ‘The Year of the Jholawallah’, Business Standard, New Delhi, 28 December 2007.

No wonder. There has been a dramatic expansion in their size, scope, and capacity, especially since the 1990s of the last century, aided by the process of globalization, the expansion of democratic governance, the development of telecommunications, market transformations, and economic integration. Changes in the nature of the social contract between the citizen and the state, and increases in the quantum of foreign aid flowing to them have aided the process. The Johns Hopkins University (JHU) Civil Society Project estimated the number of NGOs in the 22 countries studied at 20 million, with annual revenues exceeding $1 trillion. Of these, 1.2 million are said to be in India, though almost 50 per cent of them are unregistered, mostly in rural areas, and mostly small, having one or no paid staff.⁵ They are said to offer sizable employment, with nearly 20 million persons working on a paid or volunteer basis in them, and to contribute 14.8 per cent (based on paid employment only) to the gross domestic product (GDP). Overall, they vary enormously according to their purpose, philosophy, sectoral expertise, scope of activities and size.

⁵ According to a recent survey (December 2002) conducted by the non-profit organization, Participatory Research in Asia (PRIA), New Delhi.

With expansion in numbers and size, has come more visibility, power and influence, especially since collectively NGOs represent sizable investment of funds in development. Because of this they can impact the nature and direction of development, both nationally and internationally. Although the number of big NGOs is small they have acquired considerable clout. Business and government can ignore them only at their own peril. A protest by a powerful NGO against foreign direct investment (FDI) in retail can affect business investment; a campaign against pesticides in Colas by Centre for Environment Education (CSE), a Delhi-based environmental NGO, brought the Cola companies to their knees. The recent enactment of the National Rural Employment Guarantee Act, and the Right to Information Act, both landmark legislations, were spearheaded by the NGOs represented on the National Advisory Council, chaired at the time by Sonia Gandhi. NGOs such as Gene Campaign, CSE and the Narmada Bachao Andolan have been able to influence international policy on issues of trade, genetic modification of crops, climate warming and financing of big dams respectively. As NGO expertise and influence grows, corporations, parliamentarians, media and opinion leaders increasingly seek them out for information, advice and partnerships.

With more visibility has come more public scrutiny, especially over sources of funds and fund utilization. The changes in the life and operating styles of many of the top foreign funded NGO executives have not gone unnoticed, either by their peers or the general public. The satirical piece, ‘The Year of the Jholawallahs’, quoted earlier, makes fun of their ‘jet setting’ style, the quick changing funding fashions of donors, or the NGO propensity to change their mission to make money from these fashions. Consider these two excerpts:

I am soooo jet lagged and hung over — between dashing from Washington to Seattle to Geneva to Delhi, the last two weeks have been really exhausting. I don’t know if all NGO chiefs have to fly across continents, but I do know that if I didn’t, my set up would run out of funds. It is a “I scratch your back, you scratch mine” world.

The carbon trading stock market fell today. This is the area to pursue — a lot of money in the Climate Change area. Could get a paper written by one of the young things. All I have to do is polish it up and may be it will catch Nick Stern’s eye?⁶

⁶ Both extracts from Aditi Phadnis, ‘The Year of the Jholawallah’, Business Standard, New Delhi, 28 December 2007.

There are other dynamic changes in civil society, as NGOs get called upon to play new roles, at national and international levels. One of these is that NGOs are, in many cases, moving from non-profit ventures to becoming for profit social enterprises. There is a churning in the voluntary sector itself with generational changes in leadership and with leaders debating the best way forward in terms of goals, values and funding.

IT'S THE MONEY HONEY

Many believe that the malpractices, greater clout, and changes in the voluntary sector ethos are a fallout of the increase in funds going into the sector, both domestic and foreign. Undoubtedly, the expansion in numbers and scope of NGOs has been enabled by an increase in the volume of funds available to them. The corollary is that their need for funds is growing exponentially as the sector expands further. Finding different sources of funds is a central preoccupation for NGOs.

NGOs worldwide finance their work through a variety of sources including self-generated funds (membership dues, sale of products and services, user charges), charitable donations and government grants. For NGOs in developing countries there is an additional source which has become increasingly important to them, viz., foreign aid. While public donations sustained Indian NGOs in the pre-Independence period and for some years thereafter, since the 1960s, the two major sources of funds for NGOs in development have come to be government grants and foreign aid.

Both have increased steadily. External development assistance began soon after Independence but went largely into the government’s account. Aid for NGOs has become significant only in the last three decades. It includes both official development assistance (ODA), a part of which goes to NGOs either through government or directly, and private philanthropic assistance, which is regulated by the Foreign Contributions Regulation Act of 1976.

Since 1990, ODA at the global level and in India has seen a number of ups and downs, declining steadily after the end of the Cold War but increasing around the Millennium, fuelled by the Finance for Development initiative which kicked off at Monterrey in 2002, debt write-offs, and the Tsunami. The levels are again declining due to fiscal problems in many Western countries. The recent global crash of September 2008 will only exacerbate this trend, at least in the near future.

ODA in India enjoyed a peak period from 1955–60, but declined steadily thereafter, both in absolute amount as well as in significance. As a percentage of India’s gross national product (GNP), it is estimated to be only 0.4 per cent during the last decade, and even smaller if one considers only the grant assistance; so too as a percentage of development expenditure in the country (estimated at 2 per cent). It is also declining as a proportion of total external resource flows (see Chapter 3).

Bilateral aid in particular is tipped to become less significant for the government in the coming years because in 2003–4 the government announced that in view of the fact that its economic position had improved, and that it was itself offering aid to smaller developing countries, it would no longer accept any aid with conditions, or aid below $25 million from six bilateral donors.

By contrast, external aid to NGOs, fro...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Contents
• List of Tables, Figure and Boxes
• Preface
• Acknowledgements
• Acronyms and Abbreviations
• 1. Introduction
• Part I: Setting the Stage
• Part II: Aid in Action
• List of Appendices
• Bibliography
• About the Author
• Index