Does India need NGOs for development?

Does India need non-profit organisations to fuel social development? It's a question that is gaining traction because these institutions have acquired a certain critical mass and are increasingly becoming powerful voices in public discourse.

Sonia Gandhi's National Advisory Council (NAC) partly reflects this growing influence on policy in the form of the Right to Information Act, the controversial rural employment guarantee scheme and, now, the contentious food security programme.

But NGOs (non-government institutions, to give them the more commonly-used label) have been increasingly vocal on a range of issues from Bt brinjal to the nuclear liability Bill, environment, land acquisition, foreign direct investment and so on.

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It would certainly be impractical to ignore the voice of civil society as amplified by NGOs because sheer numbers suggest that they are major players in the Indian polity.

Earlier this year, a study by the ministry of programme implementation, the first of its kind by the government, estimated that there were 3.3 million NGOs operating in India as at the end of 2009.

The study said just 41 per cent of these are actually involved in social services and philanthropic activities (we can assume the rest are mostly trusts of the kind that vitiate the reputation of the entire sector).

This aligns the number closer to the 1.2 million NGOs estimated by Johns Hopkins University University's Civil Society Project in 2002. But the John Hopkins study estimated that the sector employed 20 million people - almost the same number employed by the private organised sector and double public sector employment.

Many of the larger foreign agencies resemble well-heeled corporations. One - uncorroborated - online estimate says NGOs raise between Rs 40,000 crore (Rs 400 billion) and Rs 80,000 crore (Rs 800 billion) in funding annually.

That isn't huge when set against India's GDP, but it is fair to say that India is among the "go to" nations as recipients of donor money. Foreign contributions have risen steadily - they grew 25.9 per cent in 2005-06 and 56 per cent in 2006-07.

There are two ways of explaining this NGO boom. One, it is a sign that India has progressed far enough for some sort of responsible civil society to finally emerge. This is true of corporate India where, whatever the motivations, philanthropy has emerged as a compulsory virtue.

Two, their growing presence represents the failure of government to deliver meaningful human development.

Both are valid explanations but despite its growing clout, the best of intentions and some undoubted achievements, it's not the NGO sector that can transform India's human development predicament.

It is worth noting that despite the growing size and power of the NGO sector through the nineties and noughties, India's human development record has remained at sub-Saharan levels - and sometimes below.

This is not because NGOs are inept or sinisterly corrupt but because their transmission mechanisms for change are limited, either by the size of their organisations, their agendas or the amount of donor money they receive.

The current controversies over the micro-finance business, which has a quasi-NGO status, highlight some of that dichotomy. In countries like Bangladesh, India and those in Africa, micro-finance has undoubtedly been a signal success in providing the poor access to credit that larger, formal institutions cannot deliver.

It has transformed some, even many, lives. But it has not eradicated poverty in entire nations.

This is not because those micro-finance institutions are ineffective or fraudulent - though there are some charlatans here as there are in every walk of life - but simply because these countries suffer other structural issues that are not within the domain of micro-finance.

Note that when local politicians, from Chandrababu Naidu, Narendra Modi to Buddhadeb Bhattacharya and Nitish Kumar (and even Mayawati when she can tear her attention from her statues and bank balance), want to fast-track development in their states, they rarely call on NGOs.

All the same, it would be illogical to argue that NGOs are redundant. Thousands of them do sterling work. Their presence acts as a mirror to society and has occasionally galvanised the government into positive action. For the most part, however, they remain external voices of opposition.

In the NAC, Sonia Gandhi has found a creative way of co-opting them into public policy. But the NAC remains a hotly debated association since it is affiliated to one person in one party and has no public accountability though it uses taxpayer resources.

Its prescriptions, too, have been questioned with economists arguing that employment schemes and right to food create entitlements that the government cannot afford. Still, its representatives - all people of impeccable repute - keep the issue of poverty and inequality squarely in the public eye and that, surely, cannot be a bad thing.