GS Question

The recent changes in the rule governing foreign funding of NGOs under the Foreign Contribution (Regulation) Act (FCRA), 1976 have been met with both praise and criticism. It is important to examine these changes critically to understand their potential implications.

One major change introduced is the requirement for NGOs to open an exclusive FCRA bank account in a designated branch of the State Bank of India (SBI) in New Delhi. This move aims to bring more transparency to foreign funding and prevent misuse of funds. However, this change has been criticized for being overly burdensome and impractical for NGOs operating in remote areas with limited access to banking services.

Another significant change is the reduction in the limit of administrative expenses from 50% to 20% of the total foreign funds received. This change aims to ensure that foreign funding is primarily used for the intended objectives of NGOs rather than administrative overheads. While this change may promote better financial management, it has raised concerns among NGOs that argue administrative expenses include essential expenditures for running their operations effectively.

Furthermore, the FCRA amendment mandates that organizations must submit their Aadhaar numbers, a unique identification number issued to Indian residents, for registration. This requirement has faced criticism for potentially infringing on privacy rights and creating barriers for foreigners or non-resident Indians involved in philanthropic work.

Additionally, the amendment grants the government increased power to suspend and cancel the registration of NGOs without prior notice. While this change can help in ensuring accountability and preventing misuse of foreign funding, it has raised concerns about potential misuse as well. Critics argue that this increased power could be used to target NGOs critical of government policies or those engaged in activism and advocacy work.

Overall, the recent changes in the FCRA governing foreign funding of NGOs have mixed implications. They can potentially enhance transparency, improve financial management, and aid in preventing misuse of funds. However, there are also concerns about the burdensome requirements, potential infringement on privacy rights, and increased government control, which could hinder the work of legitimate and critical NGOs. It is crucial for these changes to be continually reviewed and adjusted to strike a balance between ensuring accountability and facilitating the genuine work carried out by NGOs in India.