Non-Governmental Organisations (NGOs) in India – Need, Roles, Regulations, Issues

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Non-Governmental Organisations, for a long time, have played a significant role in a variety of fields ranging from disaster relief to advocacy of the marginalised and disadvantaged communities. They are currently a major part of the civil society, which bring rapid change and social transformation within the country. However, in recent decades, India has been a difficult environment for the NGOs due to vague laws that are stopping them from questioning the unjust government policies, discrimination, advocating for the rights of the marginalised communities and other deprived groups. Successive Indian governments have often tried to curb their activities. This is due to the limitations of Indian laws. Taking measures to ensure NGOs’ transparency and accountability through just laws and mechanisms can allow these organisations to work with the government, leading to the promotion of democratic values and social justice at the grass-root level.

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This topic of “Non-Governmental Organisations (NGOs) in India – Need, Roles, Regulations, Issues” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

What is a Non-Governmental Organisation (NGO)?

  • According to the World Bank, NGOs are private organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development.
  • NGOs are legally-constituted organisations that operate independently from the government and are generally considered to be non-state, non-profit oriented groups who pursue the interests of the public.
  • They are also called Civil Society Organisations (CSOs), charitable organisations, voluntary organisations etc.
  • These organisations are usually set up by ordinary citizens and are involved in a wide range of activities that may have charitable, social, political, religious or other interests.
  • In India, NGOs can be registered under a plethora of Acts like Indian Societies Registration Act, 1860, Religious Endowments Act, 1863, Indian Trusts Act etc.

How many NGOs are there in India?

  • India may have the largest number of active NGOs in the world.
  • However, the specific number of NGOs is not available.
  • A study commissioned by the government put the number of NGOs in 2009 at 33 lakh. That is one NGO for fewer than 400 Indians.

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History of India’s NGOs:

  • In the first half of the 19th century, the idea of voluntary organisations came into Indian society for the first time with the initiation of social reform movements. Reform movements brought in the spirit of devoting life to aid the disadvantaged sections of the society. These movements recognised the rights of women and untouchables.
  • The second half of the 19th century saw the prospering of institutionalised reform movements like Brahmo Samaj, Arya Samaj, Ramakrishna Mission etc. This led the government to pass the Societies Registration Act, 1860.
  • Between 1900 and 1947, successful attempts were made to channelize the voluntary spirit for the political action and mass mobilisation to gain independence from the oppressive colonial regime.
  • The post-independence period saw a large number of voluntary organisations involved in the process of nation-building. The shift to neoliberal economic and political planning brought forth the fast-paced growth of voluntary organisations.

How are the NGOs funded?


  • Globally, NGOs assist governments to implement their welfare schemes at the grassroots.
  • In India, ministries like Health and Family Welfare (HFW), Human Resource Development (HRD), Women and Child Development (WCD) and Ministry of Environment, Forest and Climate Change (MOEFCC) have separate sections to deal with the NGOs.
  • These ministries are flooded with requests for grants from the NGOs. However, only a handful of the NGOs linked with politicians, bureaucrats or other high-profile individuals get hefty government funds.

Foreign Sources:

  • The NGOs can receive funding from abroad only if they are registered with the Home Ministry under the Foreign Contribution (Regulation) Act (FCRA).
  • Without the registration, no NGO can receive cash or anything of value higher than Rs.25,000.

Why do we need NGOs?

  • Since independence, India has seen an improved standard of living, increased access to education and health and poverty
  • However, India still faces the issues of exclusion of women, children and the marginalised communities in the development process.
  • This led to the problem of Naxalism, farmer suicides, protests for reservations etc.
  • India holds 130th position in the 2018 Human Development Index ranking. Also, according to the Global Hunger Index of 2018, 38.4% of children under five in India are stunted.
  • In such an environment, NGOs are vital in raising the concerns of the people and ensuring the inclusive growth of all within society.
  • The state needs the constructive and collaborative engagement of the civil society in its various developmental programs and activities so that these initiatives are implemented at the grass-root level.

What are the Indian legislations related to NGOs?


  • Article 19(1) (c) provides for the right to form associations.
  • Article 43 emphasises the State’s need to promote cooperatives in rural areas.

Foreign Contribution (Regulation) Act (FCRA)

  • FCRA was enacted in 1976 during the emergency period.
  • This law regulates all grants, non-Indian gifts and donations.
  • It also bans electoral candidates, political parties, judges, MPs and even cartoonists from accepting foreign contributions. This was done to prevent foreign interference in domestic politics.
  • It was amended in 2010 to bar the organisations of “political nature” from accepting foreign contributions and mandated the organisations receiving foreign funds to renew their licences every 5 years.
  • In 2014, the Delhi High Court found that both the BJP and the Congress were violating the FCRA provisions by accepting funds from the multinational Vedanta Group Subsidiaries.
  • In 2016, the government amended the FCRA, 2010 so that the contributions from foreign companies (with 50% shareholding) to no-for-profit, political parties and candidates contesting elections, newspapers, government employees etc., does not come under the definition of foreign source.
  • This amendment made it legal for the political parties to accept foreign aid through Indian subsidiaries like Vedanta.
  • It also allowed the companies to ease the Corporate Social Responsibility spending, as the repetitive consent from the Ministry of Home Affairs is no longer required for the disbursement of funds from foreign companies.
  • Also, it allowed the NGOs to get foreign funds more easily, though they have to get permission from the MHA first.

NGO’s compliance with FCRA:

  • As per the Act, the NGO that accepts the foreign contribution has to register with the MHA and such contribution can only be accepted through designated banks.
  • The NGO also has to report to the union government about any foreign contribution within 30 days after receiving it.
  • The annual reports need to be filed by the NGOs to the MHA. They must report the amount of foreign contribution, the source, how it was received, the purpose for which it was received and how it was utilised.
  • If NGOs don’t comply with the FCRA, the government can penalise them. For instance, if the NGOs do not file the annual returns, the government can issue a show-cause notice and can later suspend or cancel their foreign funding licences.
  • The licences of about 20,000 NGOs were cancelled in the past few years by the Central government after they were found to have been violating the provisions of FCRA Act.

Foreign Exchange Management Act, 1999 (FEMA):

  • It aims to consolidate and amend the law related to foreign exchange to facilitate external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
  • The transaction under this Act is called a fee or a salary while the same under FCRA is called a grant or a contribution.
  • In 2016, the powers of the Ministry of Finance to monitor the NGOs were placed under the FEMA to bring all NGOs that receive foreign contributions under one umbrella for better monitoring and regulations of the funds.
  • This was done to make sure that only one custodian monitors the flow of the foreign funds to these organisations.

What are the roles of NGOs?

  • In India, based on the law under which they operate and the kind of activities they are involved in, the NGOs are classified into the following broad categories:
  • Registered Societies formed for specific purposes
  • Charitable Organisations and Trusts
  • Local Stakeholders Groups, Microcredit and Thrift Enterprises, Self Help Groups
  • Professional Self-Regulatory Bodies
  • Cooperatives
  • Government Promoted Third Sector Organisations

Some of the roles undertaken by the NGOs are as follows:

Advocacy/social safety:

  • The NGOs play an important role in ensuring public awareness about social problems and needs.
  • They are the voices of the people at the grass-root level.
  • They can research, analyse and inform the public about the issues they advocate or fight for.
  • Activism and lobbying are also some of the other roles played by the NGOs.

Enhancing the performance of the government:

  • The NGOs make sure that the government is accountable to the citizens.
  • They make sure that governance is inclusive rather than sectarian.
  • They encourage innovation and flexibility in policymaking by providing their independent expertise and research.
  • They are also involved in the monitoring and evaluation of government policies. The Comptroller and Auditor General (CAG) takes in the reports and social audits by the NGOs while preparing its reports.


  • The non-profit sector can be used as a flexible mechanism through which those who are concerned about social or economic problems can respond to them.
  • It also includes groups of people who wish to do public good that exceeds government or social support.
  • NGOs also assist in constructive conflict resolution. In international politics, Track II diplomacy (involving non-governmental bodies) plays a significant role in creating an environment of trust and confidence.
  • They ensure efficient delivery of services at the local level through community participation.

Capacity Building:

  • They can provide education, training and information for free to people who cannot afford it.

Ensuring community participation:

  • The non-profit organisations are capable of indulging in constructive dialogue with the communities, particularly the most disadvantaged.
  • This will allow for the promotion of community participation during the times of disasters, economic recessions etc.
  • This ensures efficient delivery of essential humanitarian services, development and social services at the ground level.

What are the issues with the NGO?

  • Difficult to monitor: Monitoring of the NGOs is a challenge as it is very difficult to distinguish whether an organisation wants to work for a cause or have been established for the getting government grants.
  • Bias: Financial dependence on the government makes NGOs less willing to speak out against the government.
  • Ulterior motive: NGOs have acted as a cover for organised crimes in past and are often seen as fronts for extremist causes.
  • Foreign interference: NGOs that are funded by foreign sources are accused of organising agitations and preventing developmental projects in India. It is often said that these NGOs are used by foreign countries to create propaganda to stall the developmental projects. Example: Kudankulam Protest.
  • Interference: The NGOs are often seen as an encroachment of centuries-old tradition and culture of people, leading to public protests against them. Jallikattu protests following the PIL by PETA is one such example.
  • Lack of supportive mechanisms: Many NGOs do not have the necessary funding, legal teams, or other needed professionals.
  • Not transparent: CBI has found that only 10% of the total registered NGOs under the Social Registration Act file annual financial statements.
  • Money laundering: Corrupt NGOs that receive foreign funds may serve as channels for money laundering.

Do NGOs come under the RTI Act?

  • Last year, the Supreme Court had held that the NGOs that are “substantially financed, directly or indirectly”, by government funds will fall within the ambit of “public authority” under the Right to Information (RTI) Act, 2005.
  • “Substantial” here means a large portion. It does not necessarily have to mean a major portion or more than 50%.
  • This would mean that these NGOs have to maintain records as provided under the Act, and all Indian citizens have the rights to get information from them.

What can be the way forward?

  • A National Accreditation Council involving academicians, activists, retired bureaucrats etc., should be set up to ensure compliance by the NGOs.
  • Improved coordination within the government: Ministries of Home Affairs and Finance must enhance their coordination to ensure better monitoring and regulation of illicit and unaccounted funds.
  • A transparent regulatory mechanism to look into the financial activities of the NGOs and voluntary organisations is the need of the hour.
  • Citizens should play a proactive role in the democratic processes that go beyond the ritual of voting. They, through the behavioural change, should bring forth social justice, gender equality, inclusive growth etc. For this to happen, the government must promote sound communication strategies with the inclusion of media and transparent NGOs.
  • Laws to promote transparency: The government should frame guidelines that mandate the organisations to maintain their accounts in certain procedures. Also, the government should take measures to obtain balance sheets when the organisations fail to provide them. General Financial Rules, 2005 mandates a regulatory mechanism for the NGOs and comprehensive law in accordance with these rules must be framed as soon as possible.


In recent decades, many NGOs in India have aided the government to serve its citizens by pushing for laws including those on the RTI, food security and rural employment. Still, India’s disproportionate number of NGOs and their lack of transparency and accountability must be dealt with quickly to prevent any unfavourable repercussions. However, the current government’s cracking down of rights-based NGOs through vague legislations goes against justice. The government must ensure that the NGOs work transparently and it must work alongside these organisations for the welfare of the people and the safety of democracy.

Test yourself:

Cooperation between the government and the NGOs is vital for the safety of the democracy and welfare of all. Elucidate.

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