The FCRA: Modi’s Secret Weapon

On April 30, 2013, the Indian Social Action Forum (INSAF)—an umbrella organization of over 700 civil society organizations—received a non-descript notice from the Ministry of Home Affairs that revoked the INSAF’s registration and froze its assets in an effort to allegedly protect “the public interest.” This was not the first time that the INSAF had encountered resistance to its activities. Both the INSAF and its member organizations had often sparred with the Indian government over issues of environmental policy including the construction of nuclear power plants and the legalization of GMOs. Thanks to an ambiguous new section of the legal code, however, the Indian government has the authority to freeze assets and rescind the registration of organizations that receive unapproved foreign funds and/or pose a threat to “the public interest.” The true motivation behind the deregistration of the INSAF was immediately obvious to the organization’s leadership: they were being targeted for their activism.

Prime Minister Narendra Modi addresses the 2014 UN General Assembly  (UN Photo/Cia Pak)
Prime Minister Narendra Modi addressing the 2014 UN General Assembly (UN Photo/Cia Pak)

The notice delivered to the INSAF in April was issued in accordance with Sections 13(1) and 14(1-2) of the Foreign Contribution Regulation Act of 2010. Based on an older 1973 law designed to shore up foreign currency reserves, the ambiguity of the amended FCRA allows for nefarious government overreach. Section 13(1) states: “Where the Central Government, for reasons to be recorded in writing, is satisfied that pending consideration of the question of canceling the certificate on any of the grounds mentioned in sub-section (I) of section 14…[it may] suspend the certificate for such period not exceeding one hundred and eight days.” Section 14 is more severe: “The Central Government may, if it is satisfied after making such inquiry as it may deem fit cancel the certificate if, in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate…”

Objecting particularly to the ambiguity of Section 14, and drawing significant support from the American Bar Association’s Center for Human Rights as well as the international CSO community, the INSAF filed a strongly worded petition with the High Court of Delhi. In September, five months after the Ministry’s notice had been delivered to the INSAF, the High Court finally dismissed the deregistration and thawed the organization’s accounts. The FCRA, however, was upheld.

The attack on the INSAF was just the beginning. In the last two years, Modi’s government has used the FCRA to target thousands of CSOs that have criticized government policies. On June 9, 2015, 971 organizations, including several prominent public universities and local chapters of international NGOs, were stripped of their registration for accepting unapproved funds. Greenpeace activist Priya Pillai, herself a recent victim of FCRA regulations, noted that “The issue is not related to the source of our funding or FCRA. It is a larger political issue under which NGOs are being targeted and persecuted for working, as well as, raising the voice of the poor, weak, and the deprived.” Ms. Pillai is partially correct. While the government’s use of the FCRA is, indeed, a reflection of larger political issues, repeal of the amended FCRA would be an appropriate first step on the road to philanthropic freedom in India.

In the 2015 Index of Philanthropic Freedom, India maintains a mid-range composite score of 3.2, but in the area of cross border flows it scores just 2.1 out of a possible 5. In his justification of this low score, Noshir Dadrawala of the Centre for Advancement of Philanthropy emphasized the onerous requirements of the FCRA: “It is important to note that no CSO operating in India whether registered or not can receive foreign contributions without first obtaining prior permission from the Home Ministry.” In order for civil society to thrive and international philanthropic funds to flow into India, the government must amend the FCRA and end its attack on the third sector.

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What Narendra Modi Can Do for Development

 

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Nearly one month after the landmark 2014 Lok Sabha election, India waits for newly-elected Prime Minister Narendra Modi to make good on his election promises. During his campaign, former Chief Minister Modi vowed to catalyze economic growth, curtail corruption, and defend the poor, a platform that surely helped him earn the largest margin of victory in the country’s history. Now, in the face of slowing economic growth and rising income inequality, Modi is expected to apply his development prowess for the rest of India.

But how?

The answer is simple: subsidy reform.

Since India’s independence from Britain, subsidies have had a major presence in India’s budget. India’s 2014-2015 interim budget estimated $21.2 billion in subsidies for food and petroleum alone. Until Modi’s election, this trend showed no sign of changing.

Next month, the Modi government is set to unveil its first budget, the first likely indicator of Modi’s fulfillment of campaign promises. Recently, Mr. Modi has hinted that his economic policies and corresponding budget will be unpopular with India, most likely due in part to the diminishing role of petroleum and agriculture subsidies.

India is host to a myriad of subsidies. From petroleum to education, India even subsidizes Muslim citizens to make the Haj. Of these, some of the most controversial are food subsidies. Within this broad scope, there are subsidies for fertilizer, irrigation, and electricity as well as in-kind food subsidies. The Government of India has barely reformed its food subsidy policy since the mid-1970s, with the exception of the 2013 National Food Security Act. The National Security Act provides food to two-thirds of India’s population, though only 22% live beneath the poverty line.

Designed with combating poverty in mind, subsidies are expected to boost production and increase efficiency while bolstering India’s recently declining growth rates. However, in reality, the inverse is true. Indian subsidies in agriculture are distributed unequally across the states. For example, the states of Assam and Madhya Pradesh, receive disproportionate agricultural subsidies, with the former receiving 600 rupees per agricultural person and the latter receiving 40 rupees per agricultural person. Both states, with active agricultural sectors, receive unequal subsidies for their efforts, leaving Madhya Pradesh to be one of the country’s more prosperous states and Assam one of the least developed.

Further, it is unlikely that in-kind food subsidies even reach India’s poorest. As early as 1985, the public distribution system was responsible for a mere 15% of the allocations meant for the poor, a track record that has worsened over time.

Though it may seem that business-centric Modi has neglected the poor in lieu of increasing foreign investment and freeing the labor markets, the new Prime Minister ’s policy reforms could be a key to reducing poverty. In a recent speech to Parliament, Modi alluded to administrative changes to increase the efficiency of the state-run Food Corporation of India. These reforms could come in the form of a nation-wide cash transfer system that could increase distribution efficiency and restore foodstuffs to market prices. With demonstrated effectiveness in neighboring Indonesia, cash transfers allow more targeted assistance and more effective poverty reduction. Though it is unlikely that Modi will eradicate subsidies altogether, it is clear that he is dedicated to their reform.

For better or for worse, Narendra Modi’s victory is a sign for changing times in Indian politics. The Modi government’s new budget is expected to be introduced in early July, but the transition from planning to implementation will be a challenge. Parliament must review and approve the budget, meaning that the Modi’s budget could be met with opposition before it even reaches the Rajya Sabha. Though scaling back subsidies and bolstering growth are ambitious, the greater obstacle could be a lack of political will.

 

 

Down and Out in Doha

Notoriety in the Gulf region usually rests on Saudi Arabia or the United Arab Emirates, but Qatar has slowly been rising in the world’s consciousness. Mostly this has been due to sporting reasons, with the purchase of Paris Saint-Germain by the Qatari Investment Authority and the granting of the 2022 World Cup to Qatar. However, this increased attention and scrutiny has shed more light on the “kafala” system of migration used in the Gulf states, and used extensively in Qatar. This has swiftly led to criticism of this system and its many abuses against migrant workers.

Migrant workers in Qatar at a construction site for the world cup

The kafala system is the migration laws and regulations used mostly in the Gulf states. Under the kafala system, sponsors pay for the recruitment of foreign workers and assume economic and financial responsibility for them. The visas for the workers are also tied to the sponsor, linking employee and employer in a tight relationship. Because the visa is bound to the employer, workers cannot seek employment with another employer without the consent of their sponsor. Any breaking of the contract means that the worker must compensate their sponsor the recruitment fee that the sponsor had paid. Workers must even get permission from their employers to leave the country while under contract. Being stuck with your employer for a two year period like this has led to numerous abuses.

Qatar in particular has been prone to abuses tied to the kafala system. With a Gross National Income per capita of $80,470, Qatar is awash with petrodollars to fund the importation of skilled and unskilled workers. Roughly 85% of Qatar’s population are not Qatari citizens, highlighting their reliance on foreign workers, particularly from South Asia and the Philippines. Many times, workers are promised a certain level of wages, and then either paid drastically lower wages or not paid at all. Workers in the construction industry face particularly bad conditions. The Indian embassy in Qatar has reported that over 500 Indians have died in Qatar since January 2012, while 185 Nepalese died in 2013 alone, mostly from cardiac arrest resulting from working long hours in the heat. Amnesty International has reported about workers living in cramped accommodations with wooden floors and no mattresses, all while being owed 1.5 million riyals ($412,000) in backpay.

Market street in Qatar

The abuses of the kafala system are not limited to construction workers. A recent report by the Guardian found that domestic workers and restaurant employees were working extremely long hours while not receiving the pay they were promised. Workers have needed to find second jobs to make enough money to get by, even though this is illegal under the kafala system. Some have even needed their families to send money, invalidating their reason to come to Qatar in the first place. Domestic workers in Qatar typically work more hours than other foreign workers, averaging 60 hours a week. Oddly enough, even soccer players have been caught under the kafala system, with French player Zahir Belounis being stuck in Qatar for a year after his club, Al-Jaish, refused to grant an exit permit. This led to the players’ union, FIFPro, sending a delegation to Qatar in 2013 to advocate against the kafala system.

One of the stadium designs for the 2022 World Cup

With increased international attention on Qatar’s kafala system, it remains to be seen what Qatar’s response will be. Most of the gulf states have similar systems, but have responded differently. Bahrain scrapped their kafala system, replacing employer sponsorship with sponsorship by the state Labour Authority. Meanwhile, Saudi Arabia has focused on deporting foreign workers to open up more jobs for native Saudis. Qatar has so far issued new safety and security reforms while increasing the amount of trained labor inspectors, all without abolishing the kafala system. With the World Cup in Qatar still a ways off in 2022, it remains to be seen how these new regulations will help migrant workers, or if anything changes. One thing that can be guaranteed is that this practice will not disappear any time soon.

Cleaning Up Indian Institutions, One Call at a Time

Petty corruption, seen as an everyday occurrence in India

“I paid this amount (Rs 600) as a fee to the Police for my wife’s passport Police verification”. This is simply one of 18,523 bribes (at the time of writing) on ipaidabribe.com in India, and what is becoming a fairly normal occurrence within India. Bribery and corruption have long been considered to be one of the key impediments to growth in most developing countries. Current World Bank President Jim Yong Kim has even labeled corruption “Public enemy number one”. In particular, India has had a fairly bad reputation for corruption, ranked at 94 out of 177 countries in Transparency International’s Corruption Perception Index in 2013, roughly the same level as Djibouti and Suriname. However, both crowdsourcing tools and new political parties in India are attempting to curb petty corruption and improve governance.

A large impetus behind this new-found interest is the surprise election of the Aam Aadmi (common man) party to the New Delhi city council. The main platform of the party was an anti-graft telephone line that would allow citizens to report graft and bribery along with providing information on obtaining evidence, effectively becoming “anti-corruption inspectors”, according to the incoming New Delhi Chief Minister Arvind Kerjwal. As long as citizens provide hard evidence, the offending individual will be arrested by the anti-corruption branch. The helpline, launched on January 9th, received 3,904 calls by 3 pm, and had found at least 38 cases of serious corruption.

In civil society, ipaidabribe.com, which is run by the group Janaagraha, has been running since 2012. The idea behind it is that by crowdsourcing and reporting incidents of petty corruption, people can shine a light on the main culprits of bribery. All of the complaints are given to the government to be further investigated. One of the issues against this crowdsourcing is that names are not given in the reports due to the possibility of infringing on libel laws. Also, the government may not necessarily take action against the corrupt individuals that are known, even if they are reported. There is a high likelihood of this could be only a palliative measure, but coupled with the surprise growth of the Aam Aadmi Party, things may change. Enough complaints about bribery during driving tests to acquire licenses in Bangalore allowed the administrator there to create the world’s first automated driving test. This change took the power out of the hands of capricious, subjective driving inspectors and transformed it into objective, observable results.

A map of India showing where bribes are reported, according to ipaidabribe.com

However, there is a current thought by development economists who dispute the fact that corruption is a serious issue. Chris Blattman highlights a few arguments in how corruption can be considered to improve the efficiency of governments in some situations. Bribes can set the price and allocation of a service, effectively acting as a tax for and distributing scarce resources, such as the time of understaffed agencies. This also reduces the the need for the central government to collect revenue in some instances, as those resources are already routed through the “taxation” of bribery. This argument does not excuse the use of bribery in developing countries, and even Blattman highlights that most economists still believe that the losses from bribery and corruption are still higher than the benefits that may be gained.

On a more macro level, an analysis of 41 studies by Nauro Campos and Ralitza Dimova showed that 2/3 of them came to the conclusion that there was no correlation between corruption and growth. Furthermore, they showed that the effects of corruption were mitigated by the openness of trade and also the quality of institutions. Along the same lines, a working paper by Lant Pritchett, Michael Woolcock, and Matt Andrews at the Center for Global Development proposes that our thoughts of quickly stamping out corruption is flawed. Most governments helping fund anti-corruption efforts expect to see quick results. However, Pritchett et al finds that it can take corrupt societies massive amounts of time to reach median levels of governance. In India’s case, they find that it would take 29-116 years to reach the governance of Singapore, depending on the indicator used to measure governance. Although the new methods of reporting may improve the lives of Indians, it will take more time than anticipated.

India’s Corporate Social Responsibility Revolution

Last year, India passed the Companies Act, a revision of outdated business practices that resulted in a stronger commitment to corporate social responsibility (CSR). The Act mandates companies worth more than $92.5 million, or with yearly profits exceeding $78 million to:

The Companies Act strives to eliminate corruption and increase public trust in the business community
The Companies Act strives to eliminate corruption and increase public trust in the business community
  • Spend at least 2% of their profits on CSR
  • Establish a CSR committee overseen by a minimum of three directors
  • Noncompliance with the mandate can result in government sanctions and jail time

The government heralds the law as a huge step forward for the Indian business community, with Sachin Pilot, the Minister of State for Corporate Affairs, proudly describing India as the “first country to mandate corporate social responsibility through statutory provisions.”

Supporters of the law are encouraged by the potential for business development, claiming it creates an opening for smaller businesses to grow. The Companies Act discourages one-time monetary donations as a form of CSR and encourages the formation of long-term projects and relationships between large corporations and social sector businesses. The law has created a niche for CSR consulting firms to help corporations develop long-term CSR projects. Consulting firms can increase business while also advertising the projects of small social enterprises. This business development is especially critical in light of India’s recent stagnating financial growth.

Increased corporate social responsibility also has the potential to transform India’s philanthropic culture. According to the World Giving Index, India ranked 134 out of 153 nations based on monetary donations, volunteerism, and willingness to help strangers.

World Giving Index 2010
World Giving Index 2010

But the Center for Global Prosperity showed in the Index of Global Philanthropy and Remittances that 80 percent of Indian citizens donated money annually. India does not lack generosity. What is missing is a long-term commitment to philanthropy at the corporate level. The government hopes to improve corporate involvement in philanthropy through this law.

Some argue the Companies Act does not prioritize sustainable development
Some argue the Companies Act does not prioritize sustainable development

Yet, the Companies Act has been met with more resistance than anticipated. Much of the criticism originates from the government mandating businesses participate in CSR. Mark Hodge, from the Institute for Human Rights and Business, argues that government involvement only reduces government accountability for providing social services. He believes increased CSR is the improper approach to sustainable development because it not only reduces government accountability but also counteract harmful business practices. He instead believes the government should direct its attention towards reforming business practices in a way that encourages sustainable development. This connects to Michael Porter and Mark Kramer’s concept of shared value, where the economic development of a company is strongly tied to the social development of its surrounding community. By eliminating harmful business practices, Indian companies could increase their profits while also improving the community’s quality of life

Other detractors criticize the mandated aspect of the law. Do governments have a right to mandate social responsibility from corporations? Pilot describes the goal of the Companies Act as “encouraging firms to undertake social welfare voluntarily.” But is it really voluntary when the consequences for not complying include sanctions and incarceration? According to Arun Maira, a member of the planning commission, the voluntary nature of CSR has the ability to earn companies public trust and loyalty, which is especially important in the Indian culture where general distrust of businesses is still high. Mandating CSR, however, might discredit the altruistic nature of public service and might create even more distrust of large corporations.

It remains to be seen whether the increase in CSR will promote business development and corporate philanthropy in India or whether it will create distrust and outsource the government’s social service responsibilities. If successful, would India’s corporate philanthropy translate into increased international philanthropy? If unsuccessful, however, this could be a set back for India’s future philanthropic development and general trust in the business community.

Slavery in the Modern World

Global Slavery Index 2013
Global Slavery Index 2013

Last month the Walk Free Foundation released their inaugural report attempting to quantify the number of people enslaved worldwide. The Global Slavery Index 2013 has concluded that almost 30 million people fall under their definition of slavery. Similar reports from the International Labor Organization and the State Department had estimated 22 and 27 million respectively. This new report clearly lays out the concentration of slavery in the world by country- implicating India, China, and Pakistan as the worst offenders in absolute terms. These three countries alone account for roughly 60% of the reported number of enslaved peoples. Mauritania, Haiti, and Pakistan are ranked as the top 3 countries with the highest prevalence of slavery relative to their population size.

Modern slavery, though it can take many forms, is generally defined as “one person depriving another people of their freedom: their freedom to leave one job for another, their freedom to leave one workplace for another, their freedom to control their own body.” Forced labor, what most people think of when they hear the term slavery, is specifically when a person is forced to work against their will through coercion or threats of coercion. While most forced labor (68%) involves activities in agriculture, construction, or manufacturing, an estimated 22% involves sexual exploitation. Bonded labor is the most common form of slavery, in which a person is forced into labor by an employer due to a debt owed. The employer stipulates that the indebted worker cannot find any other form of employment and will pay them little or nothing at all. Generally the debt can never actually be repaid despite their work exceeding the value of the original loan and in some cases is passed on through generations leaving some children born into servitude. Trafficking is also considered a form of slavery by which people are lured away from their homes through coercion or deception. Often trafficking leads to another form of slavery where people have their passport taken and are forced to work for little to no wage to repay a debt or simply to survive. Of course, other forms exist related to caste and ethnic structures or servile marriages.

The slavery Index estimates that there are 13,300,000 – 14,700,000 enslaved people in India, almost half of the global total. Slavery in India is largely internal with women and children of the lower castes or indigenous groups being the most vulnerable. In some instances people are lured away from rural areas to wealthier cities by false prospects of employment only be forced into a form of bonded labor or sold to wealthy families where they are often physically or sexually abused. Some sectors well known for their bonded laborers are stone quarries, brick kilns, construction and mining. India does have legislation banning most forms of slavery however officials do little to enforce these laws. One article states, “Officials don’t care, and sometimes even want maids for their own houses, [which is] partly why they’re silent on this.” India is also one of the few countries that has yet to ratify the Worst Forms of Child Labor Convention. Recently (April 2013), India has passed a more comprehensive ban on modern slavery though it has yet to be seen how this will be utilized by enforcement agencies.

Though some may assume slavery no longer exists in the United States, there are an estimated 57,000-63,000 people enslaved within the U.S. today and, according to the index, almost all forms of modern slavery are present here. From bonded labor to sexual exploitation slavery in the U.S. affects populations of a wide range of socio-economic class, race, and age. Some of the most vulnerable groups include temporary visa holders, domestic servants to international diplomats, LGBTQI peoples, runaways, homeless youths, and sex workers. Much of these activities occur on interstate highway routes, truck stops, urban centers, and agricultural, fishing or forestry related industries. Though the State Department released an annual Trafficking in Persons Report, they had not analyzed the U.S. until 2010. U.S. citizens forced into sexual exploitation are often younger than those from abroad with an average recruitment age of 12-14. “The National Center for Missing & Exploited Children (NCMEC) estimates that at least 100,000 American children are the victims of commercial sexual trafficking and prostitution each year.” Foreign workers are sometimes lured into the agricultural sectors with the promise of well-paying jobs only to have their passports and visas taken and forced to work in remote areas. The government has taken great strides in addressing the issue and fostering cooperation between relevant agencies and streamlining prosecution practices. They have also been supporting the efforts in civil society to identify and assist victims of modern slavery such as Truckers Against Trafficking and the Polaris Project.

Anti-Rabies Strategies: Vaccinating Dogs to Save Human Lives

Rabies is a terrifying disease that kills approximately 60,000 people worldwide each year.  Though scientific innovation has created vaccines that are effective before and after exposure to the virus, there is no way to cure rabies once symptoms have begun.  Rabies is a zoonosis, meaning that it is transmitted from animals to humans. Rabies is a threat in about 150 countries, but its fatalities are constrained to the developing world with 95% of rabies cases occur in Asia and Africa.  Over 99% of deaths from rabies occur in developing countries, one-third in China and India alone.

Risk of human rabies, 2011
Risk of human rabies, 2011 (WHO)

Rabies is a neglected disease and most commonly affects poor, young, and vulnerable populations. Children are particularly at risk– 40% of those bitten by a suspected rabid animal are under 15 – and the risk is highest in rural areas, where required vaccines may not be readily available. While rabies is always present in the wild, most human cases are caused by dog bites.  Canine rabies threatens more than 3 billion people in Asia and Africa.

“This is a disease of the poorest of the poor who can’t afford the vaccine.” – Dr. Herve Bourhy of France’s Pasteur Institute.

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