Current regulatory framework for addressing the financing of NGOs in India

QuestionExamine the current regulatory framework for addressing the financing of NGOs in India.5 January 2022


Non government organization

  • The meaning of NGO is- NGO- A NGO is a private organization that conducts activities to alleviate suffering, promote the interests of the poor, protect the environment, provide basic social services or community development.
  • They are non-profit, that is, they do not distribute the profit among their owners and directors, but the profit received has to be applied to the organization itself. They are aimed at a public purpose.
  • NGOs have to be registered under FCRA, 2010 or take prior permission to receive foreign funds.
  • There is no one specific law or any apex organization to control the activities of NGOs in India.

An Intelligence Bureau report alleged that the NGOs indulge in activities which are prejudicial to the national interest, may affect the public interest or may prejudicially affect the security, scientific, strategic or economic interests of the country. The report has described them as a major hurdle in the way of the government’s growth target and alleged that they are having a negative impact of 2-3 per cent per annum on GDP growth.

According to the IB report, many foreign aided NGOs are fueling separatism and Maoism in the country. A lot of money is going towards conversion, especially for converting tribals to Christians. He is also accused of using him as a proxy by foreign powers to destabilize India’s growth trajectory, such as protests by NGOs against nuclear power plants and mining operations.

Foreign funding of non-governmental organizations (NGOs) has been one of the most controversial issues for the governments of many countries. In the last 6 years in India, permission granted to about 18,000 NGOs to receive foreign contribution has been revoked.

Regulatory framework for foreign funding of NGOs:

Foreign contributions received by NGOs are regulated under the Foreign Contribution (Regulation) Act (FCRA), 2010. This act:

  • Regulates licensing requirements, the use of contributions received for administrative expenses, the validity of their bank accounts, their conversion to religion or their indulging in acts of communal disharmony.
  • Prohibits the acceptance and use of foreign contributions and gifts for specific classes of persons, such as election candidates, judges, journalists, etc.
  • Provides a mechanism for NGOs to submit reports on the acceptance, utilization and utilization of foreign funds.
  • NGO’s के लिए विदेशी फंड की स्वीकृति, उपयोग और किए गए उपयोग संबंधी रिपोर्ट प्रस्तुत करने हेतु एक तंत्र की व्यवस्था करता है।

Therefore, FCRA maintains the sovereignty and integrity of India by regulating the acceptance and use of foreign funds, promoting public interest and ensuring the independence or fairness of the election of legislatures. However, various issues exist with respect to the Act:

  • Aversion to Disagreement: The inclusion of cartoonists in the list of persons prohibited for the acceptance of foreign funds and the use of the term ‘organizations of a political nature’ appear to be intended to curb political dissent.
  • Inconsistent Penalties: Cancellation of FCRA licenses of over 18,000 NGOs due to various minor issues like non-submission of annual reports, non-reporting of key personnel change etc. appears to be an unfair penalty.
  • Over-regulation: FCRA rules give unchecked powers to the state to arbitrarily enforce provisions of regulation and these rules also adversely affect the development process.
  • Non-compliance with international standards: Access to resources, especially foreign funding, is part of the right to freedom of association. It should be noted that this right is in conformity with the International Covenant on Civil and Political Rights and India is a party to this agreement.

Though various issues exist related to FCRA, the allegations of corruption and lack of transparency and accountability in this sector cannot be ignored. There is a need to put in place an appropriate regulatory framework by the government, through which efforts are made to streamline processes, control corruption and effectively monitor the application of sanctions.

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