The Ministry of Consumer Affairs is conducting an in-depth financial audit of some consumer awareness NGOs that have received financial assistance from it in recent years. The move comes in the wake of allegations of misappropriation of the funds.

"It has come to our notice that some NGOs are not working according to the MoUs entered into with the ministry. We have ordered an inquiry, including a thorough financial audit, by the internal finance department," a senior ministry official told Business Standard.

These NGOs had to do a comparative study of various consumer products and run a national consumer helpline, besides making consumers aware of their rights.

The official said if the allegations were proved, the ministry would recall the money on a specified rate of interest. The NGOs could also be blacklisted depending on the severity of their offence, said another ministry official. He, however, said the inquiry was part of a routine process.

Officials said around 35 consumer awareness NGOs received Rs 3.88 crore (Rs 38.8 million) from the ministry in 2006-07. Though the ministry does not maintain a list of all NGOs in the sector, an estimated 600 such organisations are working on consumer issues in the country.

Nitish Saxena, the president of the All-India Consumer Education Society, a Delhi-based consumer awareness NGO that made these allegations, said: "While each consumer awareness NGO gets around Rs 500,000 a year, some NGOs seem to have got a preferential treatment from the ministry."

Ministry officials said the previous audit did point to a misuse of some funds. "We have asked for an explanation from the NGOs. To seek further clarifications, we have ordered an in-depth audit of all the activities of the NGOs," said a ministry official.

When contacted, a senior functionary of an NGO under scrutiny said, "These allegations are baseless. We have provided our explanation on the points raised by the ministry, which is also satisfied. In fact, we are in talks with the ministry for further funding of our projects."

"The allegations were made by people who were not able to get funds from the ministry. All our records and dealings are open to public audit," he said.