Non-governmental organizations (NGOs) are important stakeholders in the governance of a country. The National Policy on Voluntary Sector, 2007 also recognizes the role of NGOs in the developmental process and recommends various measures for strengthening of NGOs in India.

Role played by NGOs in the developmental process of the country include:

• Complementing the role of the State: NGOs have played an important role in India’s development process by carrying out supporting activities. For instance, Pratham’s educational survey helps in identifying the impact of educational services.
• Providing last mile delivery: NGOs provide last mile delivery of services where the State does not or cannot reach. For instance, Akshaya Patra NGO helps in providing mid-day meals in schools.
• Supporting participatory decision-making: NGOs provide feedback about the efficacy of government schemes and aid the State in their implementation.
• Bringing reforms in governance: The Right to Information Act and provision of social audit in schemes, which have empowered citizens were the result of long drawn movements by NGOs. NGOs have also helped in securing rights of marginalized sections of society.
• Reforming electoral politics: NGOs have been at the forefront in pushing electoral reforms and ensuring favourable Supreme Court judgments in this regard. For example, the Association for Democratic Reforms provides research support for political reforms and works towards transparency in the electoral process.

Notwithstanding the positive role they play in the developmental process, a 2014 Intelligence Bureau report claimed that several foreign-funded NGOs were targeting development projects across the country and stalling them. For this reason, the government banned 14,500 NGOs, registered under the Foreign Contribution Regulation Act (FCRA), 2010, from receiving foreign funds.

In this context, the need for regulation of NGOs arises due to the following factors:

• Hampering development projects: NGOs such as Greenpeace, Cordaid and Amnesty International are alleged to serve as tools for foreign policy interests of Western governments, which sabotage developmental projects thereby causing huge economic losses.
• Check misuse of foreign funds: If unchecked, use of foreign funds can hamper the country’s sovereignty and adversely influence policy-making and political discourse in India.
• Non-compliance: Less than 10% of NGOs have complied with the FCRA rules and more than 90% do not submit their balance sheets.
• Religious and cultural encroachment: NGOs are often seen as encroaching on tradition and culture of the people as well as misusing their influence to sell foreign narratives, push vested interests and promote religious conversion.
  • The government has barred ‘Compassion International’ from funding Indian NGOs without its permission over allegations of religious conversion.

Further, the State is well within its rights to regulate foreign funding of NGOs due to the following factors:

• Legitimate interest: One of the core functions of the State is to provide an environment in which the country can move ahead on the path of economic and technological advancement while protecting itself and its citizens from domestic as well as international threats.
• Legal authority: The FCRA authorizes the Central government to prohibit certain individuals or associations or companies from accepting foreign contribution or hospitality for activities detrimental to the national interest or national security.
• Constitutional duty: The Constitution seeks to ensure social, economic and political justice and equality of status and of opportunity. Further, the Directive Principles of State Policy seek to establish a welfare state. These objectives enshrined in the Constitution put an onus on the government to counter overt or covert operations against national development through legal means.

Thus, there is a need to balance national interest vis-à-vis the legitimate interest of the NGOs to perform their duties in the Indian democratic setup.