NGOs Under Siege: Are FCRA Rules Helping or Harming India's Most Vulnerable?

The Indian government's tightening of the Foreign Contribution Regulation Act (FCRA) has profoundly affected NGOs, their employees, and the communities they serve. These restrictions, aimed at curbing alleged misuse of foreign funds, have inadvertently hampered vital services and employment, particularly in rural and underserved areas.

NGO Sector and FCRA Changes: A Snapshot

The FCRA, introduced in 1976, underwent stringent amendments in 2020. Key changes included a ban on sub-grants between NGOs, a 20% cap on administrative costs, and stricter compliance measures. As of now:

Metric	Value
Active NGOs with FCRA Licenses	15,947
Licenses Cancelled or Expired	35,488
Civil Society Participation Index* (2023)	0.61 (Lowest in 47 years)

(*Source: Swedish V-Dem Institute)

These restrictions, though framed as anti-corruption measures, have led to the shutdown or downsizing of numerous NGOs, impacting their ability to deliver essential services.

Human Impact: Stories from the Ground

1.       Healthcare Crisis in Anjanwel
The Bombay Sarvodaya Friendship Centre (BSFC) had revitalized a hospital in Maharashtra by establishing an operating theatre and hiring staff. After losing its FCRA license in 2021, the hospital reverted to its neglected state.

o    Patients must now travel 50 km for basic services.

o    The operating theatre and X-ray facilities remain unused due to lack of funds.

2.       Employment Losses
The NGO sector, a significant employer, has been decimated.

o    Meenakshi’s Story: A Delhi social worker lost her job when her NGO’s license was revoked. Her income plummeted from ₹45,000/month to ₹5,000/month, jeopardizing her children’s education.

o    BSFC’s staff strength dropped from 30 to 7, halting community outreach programs.

Ripple Effects on Vulnerable Populations

The absence of NGOs disproportionately affects the most vulnerable, including women, children, and rural communities.

·         Access to Healthcare: Remote areas like Anjanwel now lack immediate medical care.

·         Education and Livelihood: NGOs often fund education and skill development programs, which are now discontinued, leaving communities without growth opportunities.

The Broader Implications

Critics argue that the FCRA restrictions are stifling civil society participation. This decline is reflected in Sweden's V-Dem Institute's data, showing a significant drop in India's civil society participation index from 0.84 in 2013 to 0.61 in 2023.

Additionally, previously reliant on sub-grants, grassroots organizations find themselves financially "choked," limiting their capacity to address local needs.

The Way Forward

To mitigate these challenges, the government should consider:

1.       Restoring Balance: Revisiting FCRA regulations to allow sub-grants and reasonable administrative costs.

2.       Strengthening Partnerships: Collaborating with NGOs to ensure service continuity.

3.       Promoting Transparency: Implementing robust but fair mechanisms for accountability without stifling operations.

Conclusion

While curbing corruption is vital, the current FCRA restrictions have inadvertently marginalized NGOs and the communities they support. A balanced approach that upholds accountability while fostering civil society's growth is essential for India's socio-economic progress.