In 2020, the government introduced another set of restrictions. First, the roughly 23,000 NGOs licensed to receive foreign contributions were required to receive all such funds through a single branch of the State Bank of India at Sansad Marg in New Delhi. Since only 1,488 of those NGOs were registered in Delhi, the rest had to travel to the capital simply to open an account. The branch, in turn, would report to the home ministry the details of every remittance, including its source and mode of receipt.
The second change reduced the amount NGOs could spend on administrative expenses from 50 per cent to 20 per cent of the foreign funds they received. Salaries, travel expenses, the cost of hiring personnel, electricity and water charges, telephone bills, postal and courier charges, office repairs, stationery and printing, transport, accounting and fund administration, vehicle maintenance, report writing, legal and professional fees, and rent were all classified as administrative expenses.
No more than 20 per cent of foreign funding could be spent on these essentials, even though no comparable restriction applies to any other sector in India. This disproportionately affected organisations engaged in research, advocacy and public policy work, which depend heavily on professionals such as lawyers, academics and researchers rather than brick-and-mortar projects like schools or hospitals.
Third, the law prohibited NGOs from transferring foreign funds to other NGOs, even when both organisations were fully FCRA-compliant. This struck at the way the sector functions. NGOs do not generally compete with one another in the way private companies do; they work through networks and partnerships. The change weakened those alliances, preventing larger organisations from supporting smaller grassroots groups that often lack the expertise or resources to raise funds independently.
And now come yet more rules in 2026, all of it accompanied by the astonishing slogan of ‘minimum government, maximum governance’.
Views are personal. More of Aakar Patel’s writing here
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