NRI quota generally requires fees to be paid in foreign currency.
Now, since that is the only requirement to prove you are an NRI, people abuse the loop hole. I have seen uncles and aunts in the US paying for students who were born and brought-up in India, and are Indian residents and citizens.
I am not opposing to the fact that a student gets to study what he wants to, with a higher expense (I know how much we pay for education here in the US!). But when so many more capable students can't go to higher education because of unavailability of seats, I find it rediculous.
In a nut shell, you are an NRI if you have some uncle out of the USA, who can pay for your education. Even if you are going to copansate him in INR for the fees he pays for you.