India’s Changing Relationship with Foreign Aid
India used to rely heavily on foreign aid, especially after Independence, mainly from Western countries.
Most aid went to the government; some went to NGOs for humanitarian and development work.
Since the 1990s, with India’s economic growth, official foreign aid has become less significant.
Now, India prefers foreign direct investment (FDI) and global cooperation on trade and climate change over traditional aid.
Impact on NGOs
NGOs depend on both government grants and foreign aid to work on development and social issues.
Private foreign aid has been declining, affecting the ability of NGOs to carry out their work.
Public donations were important in the early years, and corporate social responsibility funds became significant only after 2013.
Reduced aid may lead to unfinished projects, fewer services for the poor, and less accountability for the government.
Role of FCRA and Government Policies
The Foreign Contribution Regulation Act (FCRA) controls how NGOs can receive and use foreign funds.
Since 1976, the law has become stricter through amendments in 2010, 2011, 2020, 2023, and 2024.
Many NGOs have lost FCRA licenses; some foreign donors have been discouraged.
The “foreign hand” has often been blamed for anti-government activities, including protests and conversions.
Why Foreign Aid Matters for NGOs
Foreign aid provided flexibility and helped NGOs adopt new ideas and practices.
It supported NGOs in holding the government accountable and protecting vulnerable communities.
Government funding is often limited and rigid, making foreign aid a vital source of innovation and independence.
Completely ending foreign aid could harm India’s social development and civil society.
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