That seventies feeling

The government is returning to a 1970s mentality. This mentality used a presumptive distrust of citizens as an excuse for enhancing state power. It sought accountability, not through intelligently designed transparency norms, but greater discretionary power in state officials. And finally, it sought to curb citizens' freedoms, not by directly assaulting them, but by embedding them in a structure of regulation that deters free expression.

This mentality connects three recent sets of regulations that directly impact civil society. India's FCRA (Foreign Contributions Regulation Act) was always a source of great discretionary power for the state. But the new legislation is even more draconian. It takes away the existing provisions that institutions can, after due scrutiny, get permanent FCRA accounts, subject to various reporting requirements. All institutions will now have to reapply every five years. In addition, the granting of these permissions is subject to broad discretionary power by lower levels of the state.

The proposed Direct Tax Code is, to put it mildly, uncharitable to charities. It restrictively narrows the definition of what counts as charitable activity. It taxes charities on the basis of an absurd method of cash accounting. It is premised on the bizarre assumption of the Shome committee that any organisation that raises revenue cannot be charitable or contribute to public purpose. It will severely affect the vibrancy of the not-for-profit sector. The new Internet rules threaten free expression. They will arbitrarily enhance state power.

These proposals are nothing but an insidious tightening of the noose around civil society. Each requires detailed analysis. But it is the broad premises behind them that require deconstruction.

The first premise is an outdated conception of accountability. No one denies that not-for-profits or institutions receiving foreign funds need to be held broadly accountable. The government already has all the powers it needs. But it cloaks up its implementation failures by enacting new laws. The simplest way of ensuring accountability is well-designed reporting requirements, and making accounts of charities and not-for-profits public, instead of making them subject to the continuous discretion of state officials. Such horizontal accountability would be far more efficient and fair than asking groups to continually seek permission. There are over three million civil society groups. As it is, the state cannot cope with demands for renewing a whole series of approvals; renewing tax-exempt status can take years. Instead of transparency, what the state will end up promoting is its own discretionary powers, an increase of workload that will defeat the purpose of proper regulation and produce greater uncertainty for civil society. And this they call reform.

... contd.

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