Q13.Examine critically the recent changes in the rule governing foreign funding of NGOs under the Foreign Contribution (Regulation) Act (FCRA), 1976.

The Foreign Contribution (Regulation) Act (FCRA), 1976, governs the acceptance and utilisation of foreign funds by individuals and associations in India, primarily to safeguard national interest and security.

Key Amendments and Rationale

Recent amendments, notably FCRA 2010 and subsequent rules, have significantly tightened regulations. Key changes include increased compliance requirements, mandatory bank accounts, and stricter limits on administrative expenses (e.g., reduced to 20%). The government's rationale is to enhance transparency, prevent fund diversion, and curb activities detrimental to national security.

Positive Implications

• Greater accountability and transparency in foreign fund utilisation.
• Reduced potential for fund misuse and illicit activities.
• Enhanced national security by monitoring suspicious financial flows.

Criticisms and Negative Impacts

• Increased bureaucratic burden and compliance costs for NGOs.
• Stifling of civil society, particularly grassroots development work.
• Chilling effect on freedom of association and potential for arbitrary action.

While regulating foreign funding is essential, a balanced approach is crucial to ensure accountability without unduly restricting legitimate civil society activities vital for democratic functioning.