ACHR PRESS RELEASE

ACHR INDEX: PR/IND/01/2013
Date: 18 January 2013

Govt’s funding of hundred of crores to NGOs is a scam

- CAG audit is in-frequent, inadequate and not inclusive of NGOs -

New Delhi: Asian Centre for Human Rights while releasing its report “India’s Funds to NGOs Squandered” stated that government of India’s funding to the tune of hundred of crores to voluntary organizations is a scam and is in dire need of reform as the audit by CAG is in-frequent, inadequate and does not include the NGOs.

Scale of the grants to NGOs: At least 1,000 crores per year

As per the RTI replies received, the Central Government Ministries and the State Governments provided at least Rs. 6654,35,87,684 as grants to NGOs/VOs during FYs 2002-2003 to 2008-2009 or an average of Rs. 950,62,26,812 every year. This includes Rs. 4756,71,26,395 given by the Central Government and Rs. 1,897,64,61,289 by the State Governments.

“The figure of Rs. 6654.36 crores of funds given to NGOs is only indicative and not accurate. First, a number of States and Union Territories such as Madhya Pradesh, Uttar Pradesh, Orissa, Jammu and Kashmir, Arunachal Pradesh, Mizoram, Dadra and Nagar Haveli, Daman and Diu and Lakswadeep failed to provide information about the grants given to NGOs. Second, many departments of the State Governments and Union Territories (UTs) which replied did not provide full information. Third, the Central government Ministries provided much less figures under the RTI applications in comparison to information placed before the Parliament (both Lok Sabha and Rajya Sabha). Fourth, little information was made available with respect to many flagship programmes including the Mahatma Gandhi National Rural Employment Guarantee Act. Fifth, many of the government owned Public Sector Undertakings did not provide information about the funds given to the NGOs as part of the Corporate Social Responsibility and therefore, not included in this study.” – stated Mr Suhas Chakma, Director of Asian Centre for Human Rights.

According to information obtained under the RTI applications, the Ministry of Social Justice and Empowerment topped the list amongst the Central Ministries/Departments in providing grants to NGOs/VOs with Rs. 1,460 crores during 2002-2003 to 2008-2009  followed by the Ministry of Women and Child Development with Rs. 950 crores, Ministry of Health and Family Welfare with Rs.578 crores, Ministry of Rural Development with Rs. 363 crores, Ministry of Tribal Affairs with Rs. 343 crores, Ministry of Human Resource Development with Rs. 250 crores, Ministry of Science and Technology with Rs. 151 crores , Ministry of Youth Affairs and Sports with Rs. 125 crores  and Ministry of Development of North Eastern Region and North Eastern Council (NEC) with Rs. 11 crores, among others.

Bribe of at least Rs 1000 crores in seven years?  For Ministry of Environment and Forest, money grows on trees

The selection procedure for the grantees lacks transparency. All the Ministries claim that applications are selected on the basis of merit. But how that merit is determined is unclear. In reality, merit matters little. There is a mandatory requirement of recommendations from the State Governments which facilitates corruption. In overwhelming majority of the cases only those voluntary organizations which are close to the government officials or those who have control over the officials/NGOs i.e. political leaders are selected.

Field studies by ACHR suggest that selection of grantees is often determined not on ability or technical expertise but rather on the applicant’s ability to pay a bribe. The NGOs interviewed by the ACHR alleged that to have their application approved required bribes amounting to 15% to 30% of the grant. If a conservative estimate of 15% is used as a “bribe to process the applications”, during the Fiscal Years 2002-2003 to 2008-2009 at least Rs. 1000 crores have been spent on bribes paid to different layers of officials for approval of the projects.

These estimated Rs 1,000 crore bribes must be seen in the context of the Comptroller and Auditor General’s (CAG) ReportNo.17 of 2010-2011 pertaining to audit of transactions and performance in the Ministry of Environment and Forest in which the CAG concluded that 7,916 Utilisation certificates (UCs) from the grantees for grants worth Rs 596.79 crores from 1981-2009 were not obtained under the scheme of Grants-in-Aid to Voluntary Agencies. The CAG concluded that the possibility of misutilisation/fraud is not ruled out as majority of VAs/State Forest Departments /Forest Development Associations neither came back to the National Afforestation and Eco-Development Board (NAEB) for the next installment after release of first installment nor did they furnish UCs/progress reports”. – further stated Mr Chakma

No accountability beyond blacklisting

There is little accountability beyond blacklisting. 

The CAPART under the Ministry of Rural Development sanctioned 24,760 projects during 1 September 1986 to 28 February 2007 involving a total sanctioned grant of Rs 252,02,44,12.56. Out of these, 511 NGOs were placed under the blacklist category due to irregularities committed. However, out of 511 blacklisted agencies/NGOs only 10 cases were referred to the Central Bureau of Investigation (CBI) for investigation while the First Information Reports (FIRs) were lodged against only 101 NGOs. By 3 August 2009, the number of NGOs blacklisted by the CAPART increased to 830 and FIRs were lodged against 129 blacklisted NGOs. By 3 May 2012, another 81 NGOs were placed under Black List category and 195 NGOs were placed under Further Assistance Stopped (FAS) category by the CAPART.

The problem with blacklisting is reflected from the fact that CAPART even released Rs. 46,83,142 to five blacklisted NGOs namely Nirmala Weaker Section (Andhra Pradesh), Sarvodaya Ashram (Bihar), Magadh Social Development Society (Bihar), Pazhakulam Social Service Society (Kerala) and Vijay Warangal Trust (Maharashtra) in 2009.

Though 7,916 Utilisation Certificates from the grantees for grants worth Rs 596.79 crores have not been received by the MoEF, the National Afforestation and Eco-Development Board under the MoEF had filed only seven FIRs and only one voluntary organization from Orissa had returned the money in November 2009.

The Ministry of Women and Child Development alone blacklisted 389 NGOs and further assistance to these organizations from the Rashtriya Mahila Kosh (RMK) scheme has been stopped. Three organizations viz. the Central Social Welfare Board (CSWB), an autonomous organization, and Indian Council of Child Welfare (ICCW) and Bharatiya Adim Jati Sewak Sangh (BAJSS) acting as ‘mother’ outfits for the Rajiv Gandhi National Creche Scheme were allocated a sum of Rs 110 crores annually since 2006. There were reports of irregularities and pursuant to an application under the Right to Information Act, 2005 filed by the ACHR the Ministry of Women and Child Development confirmed that the Ministry had ordered an investigation and requested the Institute of Chartered Accountants of India (ICAI) to check the authenticity of the Chartered Accountants engaged by these three organizations. In an RTI reply dated 7 July 2010 the Ministry informed ACHR that the M/s Pawan Kumar Garg & Co., engaged by the Bharatiya Adim Jati Sevak Sangh is not a registered firm of Chartered Accountants as per ICAI records. In a communication dated 7 May 2010 under the RTI Act, 2005 the CSWB informed the ACHR that no investigation has been going on against the CSWB indicating that no inquiry was launched against the officials responsible.

The fact that blacklisted NGOs are re-funded and the Ministry of Women and Child Welfare annually granted Rs 110 crores since 2006  to three organizations out of which at least one NGO’s accounts are not even audited by a certified chartered accountant exposes the malaise with Government of India’s funding to NGOs. The investigation of the Ministry of Women and Child Development could not even obtain a response from Bharatiya Adim Jati Sevak Sangh regarding the registration number of  M/s Pawan Kumar Garg & Co. with ICAI and the investigated ended there.”- further stated Mr Chakma.

The only case that came to light during the study in which limited action was taken was with respect to six officers of CAPART identified as Surendra Singh (Director), S. D. Singh (Assistant Director), Y. Bhakta (Research Officer), A. R. R. Pillai (Research Officer), M. P. Singh (Research Officer) and S. K. Das (Research Officer) and they were awarded reduction of pay and increment.

Funds increasing: Need for a National Grants-in-Aid Commission

The grants to the NGOs given by the Government of India have been increasing and as per the RTI responses, the amount increased from Rs 561 crores in 2002-2003 to Rs 835 crores in 2008-2009.

However, from pre-funding assessment to evaluation of the activities implemented, there are no mechanisms. The funding given to NGOs are not subject to CAG audit while the decision making process of funding by the officials too has never been subject to any evaluation. It has taken the CAG about twenty years to recognize the malaise of funding by the Ministry of Environment and Forest. Therefore, CAG audit is too in-frequent, inadequate and does not cover the NGOs. Even though the CAG concluded that under the scheme of Grants-in-Aid to Voluntary Agencies, only 3.57 per cent of the projects sanctioned to VAs and 23 per cent of the projects sanctioned to State Forest Departments / Forest Development Agency could be completed and more than 93 per cent of projects did not achieve their targeted objectives, the recommendations of the CAG have been gathering dust.”  – Stated Mr Suhas Chakma.

As India involves the NGOs/ VOs in the implementation of its programmes more than ever, India must realize that funding to voluntary sector is not something that can any longer be done as part time job of the government officials, many of whom are the ultimate and illegal beneficiaries of the funds granted to the voluntary sector.

In order to address the malaise, Asian Centre for Human Rights recommended to the Government of India to establish a “National Grants-in-Aid Commission” through which all grants to the voluntary sector by all the Ministries shall be routed and the “National Grants-in-Aid Commission” be responsible for all aspects, inter alia, calls for proposals, selection of proposals, monitoring of implementation, review of reports, recovery of funds etc. In the interim period, ACHR has requested the Government of India to direct (i) all the Ministries to do away with current process of recommendations by the District Magistrates and the State Governments, invite applications through open call for proposals, consider the applications on merits by independent evaluators, and conduct necessary verification only after short-listing of the applicants; and (ii) direct all the Central Ministries, the State Governments and Union Territories to make all information pertaining to the grants to voluntary sector including recommendations of the State government publicly available as part of the voluntarily disclosure under the Right to Information Act, 2005. [Ends]