The challenge for civil society


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THE public arena can be conceptualized as a triangle whose three vertices are civil society, the market and the state. Civil society began with primordial social groupings such as the family, the clan, the tribe and as humans engaged in settled agriculture – the polis or the nagari. Though civil society arose before them, the market and the state which came later, slowly gained greater primacy. Thus the triangle became inverted, with civil society at the base and the state and the market at the top. This is because both the state and the market were strengthened by creating single purpose institutions.

In general, state institutions were aimed at maximizing power, while market institutions were aimed at maximizing profits. Civil society institutions, in contrast, were usually built for social purposes and instead of underlining their for-purpose nature, they were denigrated as non-profit or non-government organizations. That those phrases are ridiculous can be seen when civil society actors begin calling state and market institutions ‘non-social organizations’!

The 19th and 20th centuries saw an enormous growth of state and market institutions, due to which civil society Institutions (CSIs) declined in relative importance. The 20th century saw a major tug of war between the state and market institutions. State institutions dominated in the first half-century, whether in the communist or the capitalist world. Lenin converted the communist ideal into state control of both economic institutions (e.g. farms, enterprises) and social institutions (e.g. churches, schools) in the name of equality. In the capitalist world, after the Great Depression, Keynes’ economic theories legitimized control of the state over the economy in the UK, in the name of demand creation. Later, President Roosevelt legitimized the welfare state with the New Deal. Many of these ideas were later adopted by all ‘enlightened’ liberal, social democracies and then by newly independent nations such as India.


In the last two decades of the 20th century, market institutions reasserted themselves. Communist states disintegrated, central planning lost credibility, the public sector began to be privatized and the welfare state was dismantled. However, the problems of an unbridled market became quickly visible – in the form of repetitive financial crises and increased disparities among the rich and the poor in the developed countries. The global financial crisis in 2008 was the ultimate proof that market institutions were incapable of regulating themselves, partly because a herd mentality takes over at times of crisis. The global environmental crisis was another example of how ineffective market mechanisms by themselves were in handling global warming or more localized pollution. Again state intervention was required to tackle the environmental crisis.

We assert that this ding-dong battle between the market and the state can never be settled without a third force. If the 21st century has to avoid the folly of the reassertion of the state in response to the excesses of the market, the strength of the CSIs needs to be built up as a balancing force between the state and market institutions. This is the single most important reason for CSIs to exist and play a robust role. Thus we begin by first establishing in theory why CSIs should exist, what key function they play without which our lives – political, economic and social – would be worse off. Then we can move to the more operational part of the question – how to build civil society institutions, how to govern them, how to fund them, how to staff them, how to keep them on the straight and narrow path and how to reinvent them periodically, when required.


There are seven intrinsic reasons why we need to build robust Civil Society Institutions. Civil Society Institutions play a role in balancing the state and market institutions and are essential for ‘restoring sanity’ whenever either of them cross a line. CSIs influence political change and the enactment of pro-consumer/pro-user and pro-environment laws to control market players. CSIs are practice fields for democracy. Alexis de Tocqueville wrote in Democracy in America that it was ‘a nation of joiners’ in which people formed numerous neighbourhood groups and wider social associations, to address a number of needs and issues. These groupings and associations then gave them the practice for political democracy. In India, CSIs have been at the forefront of struggle in the freedom movement, as well as in constructive work and social reform. It is only because of CSIs that India has transformed itself from a feudal society.

CSIs are early warning mechanisms, which are able to detect and amplify perturbations on the ground, among the people, and alert society, the state and the market to take corrective action. They thus play an important stabilizing role in the polity and economy.

Civil Society Institutions are the biodiversity reserves for preserving a vast variety of ideas and beliefs. Nature preserves a vast number of species ecosystems, so that when the environment changes at least some species will have the adaptive mechanisms to survive the change, and life will continue on the planet. If only similar species were preserved and the environment became adverse for them, these would all perish and life would end. Similarly, diverse ideas and beliefs must be preserved and CSIs alone can help preserve them.

CSIs are incubators for innovative approaches to resolve refractory problems which neither the state nor the market have been able to crack, such as guarding civil liberties or lack of basic services to the majority. CSIs can promote innovation which decentralizes power or reduces profits while increasing welfare. This will never be done by state or market institutions. Only CSIs can focus on enhancing and sustaining well-being for all. Market institutions are designed for maximizing profits, while state institutions are designed for maximizing power or control or order. Thus CSIs need to take the lead to restore the ‘sarve sukhina bhavantu’ norm in society, which is not the motto of state or market.


The process of influencing both the state and market institutions, to retain and sharpen focus on the issues of the socially disadvantaged, and on the environment, would require CSIs to be more effective. But CSIs have their own problems too. Discussions about CSIs in India in recent times are focused on such issues as an increasingly oppressive state, which has been arresting activists, raiding CSIs and curbing sources of foreign funding while imposing onerous reporting and operating conditions; the rise of the right wing which questions the very legitimacy of the CSIs, just as the left was doing in an earlier generation; the increasing marginalization of civil society with respect to all three spheres of our lives – political, economic and social.


A large number of CSIs are seen as ‘self-appointed do-gooders’, not accountable to any constituency other than their donors. Many CSIs are seen as corrupt, or at least venal, and as personal fiefdoms of charismatic founders who continue in leadership positions long after their passion for the cause has died. Jobs in CSIs are seen as employment of last resort, to be abandoned for a position in a company or a government agency as soon as an opportunity arises. Very few talented people join CSIs.

For CSIs to counter all these criticisms, they need to take a number of decisive steps. CSIs need to increase their membership or usership base and become accountable to them. CSIs must become more democratically governed, participatory and accountable. CSI boards must have a majority of directors from among those that they strive to organize or serve. In addition, there may be a few independent directors representing broader public interest. Directors together must pay attention to mission validation and mission compliance of the CSI. Board members must have term limits, ideally not exceeding three consecutive terms of three years each. Similarly, the CEOs of CSIs should also have term limits, ideally again no more than two terms of four or five years each.

CSIs need to evolve multiple sources of funding, primarily based on member contributions and user fees, and leverage these proportionately with grants from the government’s tax revenue and a share of the corporate social responsibility funds. All of the other sources must be linked to what they raise from their members or users, with an upper limit per member which is fairly low, so that the number of members, not the total amount collected from a few rich ones, matters. CSIs must accept and practice the highest standards of financial reporting and disclosure and hold themselves open to public audits, social audits, impact assessments and so on. These should be available on their websites for all stakeholders. CSIs should adopt and enforce a code of conduct and ethics which makes them acceptable as legitimate and well meaning actors.

Next, CSIs must attract the best of talent but those who get employment in CSIs must first perform at least three years of voluntary service with just a living wage stipend, working with poor or disadvantaged communities in rural or urban low-income areas. CSI staff can thus be more connected with their members/users and become more adept in their chosen fields of work, be it grassroots action or policy advocacy. CSI staff should be remunerated at levels which make CSI careers comparable to government and corporate careers. This can be achieved gradually over a period of time.


Market institutions need to be held accountable for their acts of omission and commission which have enormous social and environmental consequences, not just economic or financial. All economic legislation and attendant regulation was to be subjected to detailed scrutiny in terms of its social and environmental consequences and fairness to consumers/users and the wider community. The state institutions which were given this responsibility have not proved too adequate and worse, are often collusive with market forces. To perform this task effectively, a new form of CSI, namely a consumer union or a user association should be formed for every major category of product or service, provided by any market institution, including sate owned businesses. This will require an enabling law.

Companies must have at least two board members, one male and one female, who are from CSIs. Banks, insurance companies, utility companies and companies in the health, education and training sectors must have at least one third of their board members from CSIs. Corporate Social Responsibility (CSR) spending requirement of 2% of profits, should be split 50:50, with 1% to be spent by CSR foundations established by the respective companies and the second 1% to be given to unrelated party CSIs to undertake various other programmes.

All industry associations and chambers of commerce must be registered as not-for-profit CSIs. They can be used as consultative forums for non-business CSIs working on social or environmental issues of relevance to the respective industry association.

This is a very ambitious list and it will take long for market institutions to concede this space to CSIs. But the best of them will see that it strengthens their long-term prospects substantively. Many large corporations which changed their attitude towards environmental activists and began a dialogue with them, found that moving to cleaner methods of production was actually more profitable in the long run.


The Constitution of India laid down the freedom of citizens to form associations under Article 19 (c) but very little was done to valorize those associations, which are the building blocks of civil society. The reason for this was that once Independence was gained, the primary federation of civil society institutions in India, the Indian National Congress, abandoned its social agenda and embraced a political one. The Congress became a political party, much against the advice of Mahatma Gandhi.


The first major political task after Independence was formulation of the Constitution. Its preamble lays down a vision for India which would unleash enormous amount of social progress, based on the values of justice, liberty, equality and fraternity. But other than the preamble, the Constitution reflects a belief that the state is the sole instrument of social progress, which was not true of the history of the previous 200 years. Social progress was led almost always by civil society institutions and not by the state. The obsession with the state as the sole or at least the primary instrument of social progress was a relatively new phenomenon and it led to the creation of a Constitution which completely denied a role to civil society.

This needs to be corrected and to do this a constitutional amendment and amendments in specific laws are required. How will support for such an action be gathered is an unanswered question. But that should not prevent us from laying down in some detail what is it that we need to correct, to win a rightful place for civil society in building the vision of India which is laid down in the preamble of the Constitution. Some of these measures are listed below:

* Civil Society Institutions should be a defined term in the Constitution as was done for Cooperative Societies under Part IX-B inserted by the Constitution (97th Amendment) Act, 2011, w.e.f. 15-2-2012. Not-for-profit educational, healthcare, cultural, sports and media institutions as well as not-for-profit social enterprises must be brought into the ambit of CSIs.

* Make the Directive Principles a conjoint responsibility of the state and CSIs by amending Articles 38 to 51 (except article 50) to read as follows: (the addition in the original clauses is indicated in italics below only for Article 38 (1) but thereafter the language is similar: Article 38(1)) to read as follows: ‘The State shall strive, directly as well as by involving and enabling civil society institutions, to promote the welfare of the people…’

* Add a new Article 43(C) as follows: ‘The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of civil society institutions and establish mechanisms to consult them, fund them and collaborate with CSIs.’

* Amend Part IV A on Fundamental duties as follows: Article 51-A: ‘It shall be the duty of every citizen of India, individually as well as a member of various civil society institutions.’

* Establish a National Commission on Civil Society Institutions answerable to the Parliament.

* Add to the terms of reference of the Finance Commission, as well as the State Finance Commissions, to devolve at least a minimum portion of the tax revenues to a National CSI Fund.

* What CSIs get out of this National CSI Fund should be proportionate to member contributions and user fees that a CSI raises, subject to a fairly low (say Rs 1000 per annum) limit per member/user, so that the number of members/users matters more than the total amount.

* Broaden the ambit of the Comptroller and Auditor General, the Central Vigilance Commission and the Central/State Information Commissions to cover CSIs. Corrupt CSIs must be closed down and individuals responsible for corruption must be punished as public servants.

* Ensure that the Union and the State Public Service Commissions have at least two qualified members from CSIs to ensure the selection of socially conscious people in public service.

* Ensure that all constitutional and regulatory commissions have at least two members from CSIs.

* Amend all laws specifically impacting CSIs to have standing consultative committees with CSI representatives. Laws include the Indian Trusts Act, Societies Registration Act, Sec 8 of the Companies Act, Sec 12(A) and 80(G) of Income Tax Act and Foreign Contribution Regulation Act.

* Amend Section 20(B) of the Representation of People’s Act, 1951 to enable qualified CSI representatives to become observers in elections, to catch electoral malpractices as they happen and make political parties more accountable to CSIs.

* Establish standing parliamentary committees on CSIs, as well as standing consultative committees with CSIs in ministries/departments and with the judiciary at all levels from district courts up.


This is a very ambitious list and it will take decades, if ever, for this to be achieved. It will require a second freedom movement, this time against the twin internal enemies: a power-hungry Indian state which has largely failed to deliver the vision laid down in the Preamble of our Constitution and the profit-hungry market institutions, which have appropriated the gains of freedom for a few. The task of civil society is cut out. Let us not be supplicants for leftovers from the government or corporate tables, but instead, hold a preeti bhoj with the people and invite the state and the market representatives to attend on our terms.

‘First they ignore you, then they laugh at you, then they fight you, then you win.’ Mahatma Gandhi.


* Before taking up his current assignment with the RGF, Vijay Mahajan was the founder and CEO (1996-2016) of the BASIX Social Enterprise Group; the founder and CEO (1991-95) of Vika Soko Development Exchange and the founder and Director (1982-90) of PRADAN (Professional Assistance for Development Action), an NGO.