What happened to the Rs 94K cr that Indian NGOs received over 17 years?

It is time the government woke up to the risks that uncontrolled foreign monies flowing to Indian NGOs pose to India's economic progress, social cohesion and national integrity.


PM wakes up to dollar driven NGO threat, screamed a newspaper headline. The government has cancelled licenses of three such organisations for diversion of funds to fuel anti-nuclear protests in India.

This decision has once again put the spotlight on foreign funding of NGOs. A close perusal of the FCRA Report published by the home ministry reveals billions of dollars received by NGOs in India.

Before analysing the latest FCRA report a bit about the regulatory framework for NGOs to receive foreign money.

The Foreign Contribution Regulation Act was passed in 1976. It was repealed and FCRA 2010 was passed along with the Foreign Contribution Regulation Rules 2011. Both became effective from May 1 2011.

They seek to regulate the receipt of funds by NGOs. The FCRA is managed by the Ministry of Home Affairs (MHA).

Any organisation that wants to receive contributions from abroad has to apply and get approval from the home ministry. All remittances are received into a single bank account of a scheduled bank or through such branches as may be specified.

If an NGO, whether registered or not, receives a contribution in excess of Rs 1 cr (rs 10 million) during a period of 30 days, the bank has to report this to the central government within 30 days of the date of such last transaction.

The NGO has to annually submit audited receipts, payments account, balance sheet etc to the ministry. The MHA scrutinises the returns to ensure that contributions received for a particular purpose are used for that purpose only. It does a detailed check of randomly picked associations and collates the data received to present the FCRA Annual Report [uploaded on http://mha.nic.in/fcra.htm].

The associations could be religious, social, educational, cultural or educational organisations. MHA wants to ensure that foreign contributions are utilized for bona fide activities and do not compromise national security.

The FCRA report for the year ended 31st March 2010 was published on 11th January 2012 i.e. 21 months after year end.

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Trends in foreign contributions

Indian NGOs received a staggering Rs 94,520 cr (Rs 945.20 billion) from 1993-94 to 2009-10.

As on 31.3.2010, there were 38,436 registered associations, up 5.5 per cent from the previous year, 27 per cent when compared to 2004-05 and 68 per cent as compared to 2000-01. Clearly the number of registered NGOs that receive dollars has seen a huge surge in the last decade.

Year	Registered Associations (as on 31st March of F.Y.)	Associations that gave details of remittances received	Amounts received Rs crs
1993-94	15,039	Not Available	1865
2000-01	22,924	64%	4535
2003-04	28,351	61%	5105
2004-05	30,321	61%	6257
2005-06	32,144	58%	7878
2006-07	33,937	56%	11,336
2007-08	34,803	54%	9,663
2008-09	36,414	55%	10,803
2009-10	38,436	56%	10,338
	Total 1993-94 to 2009-10		94,520
		$ Billion	18.90

All numbers in this article are reproduced from FCRA reports published by the MHA. Assumed an exchange rate of Rs 50 to a dollar and all figures rounded off to the nearest crore in article.

In 2009-10, 7,275 of the 21,508 associations who submitted their accounts did not receive any foreign contributions. This means that only 46 per cent of the associations who received foreign contributions filed their annual returns with MHA. Hence, the actual amount of contributions received by NGOs would be much higher than Rs 10,338 cr (Rs 103.38 billion) reported above.

Is such unreported contribution being used for money laundering, terrorist activities or funding protests as mentioned by Prime Minister Singh?

During the year, 21,000 defaulter associations which had not submitted returns for the years 2006-07, 2007-08, 2008-09 were issued Show Cause Notices. We are already in the first quarter of 2012.

By the time these NGOs reply to the notices and the government decides what action to take against them, the NGOs might receive many more crore with zero accountability to the government.

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Largest donors country wise (in Rs cr)
                                                                             

Year	USA	Germany	UK	Italy others
2002-03	1680	715	685	NA
2003-04	1584	757	676	350
2004-05	1927	931	764	353#
2005-06	2426	1181	1062	500
2006-07	2949	1033	1428	606&
2007-08	2928	971	1269	515
2008-09	3433	1103	1131	547
2009-10	3106	1046	1039	583
Total	20,033	7,737	8,054	3,454
$ Billion	4.0	1.55	1.61

Italy, #Netherlands, & Switzerland.

The top three donor countries for many years have been USA, Germany, and UK. Remittances from the U.S. between 2002-03 and 2009-10 have nearly doubled. Despite the economic downturn, the West has continued contributions to Indian NGOs? Why?

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Key Donors: Country wise Trends (in Rs cr)

Country	2009-10	Country	2008-9	Country	2007-8
USA	3106	USA	3433	USA	2928
Germany	1046	UK	1131	UK	1269
UK	1039	Germany	1103	Germany	971
Italy	583	Italy	547	Italy	515
Netherlands	509	Netherlands	513	Netherlands	414
Spain	437	Spain	437	Spain	401
Switzerland	302	Switzerland	370	Switzerland	364
Canada	298	Canada	303	Canada	276
France	189	France	193	France	196
Australia	148	Australia	131	Australia	138
UAE	133	Belgium	124	Belgium	100
Belgium	122	Austria	106	Austria	99
Austria	112	Sweden	103	Sweden	89
Sweden	106	UAE	146	UAE	79
Mauritius	101	Ireland	69	Ireland	77

Should a country that aspires to be a superpower continue to receive billions of dollars as charity every year? Spain and Italy are in dire economic straits, Britain had a fiscal deficit of 11% of GDP in 2009-10 yet they remitted over Rs 1000 crs to Indian NGOs per annum.

Significantly, barring the UAE, all countries listed above belong to the West. Media reports indicate that some countries in the Middle East, notably Saudi Arabia, made large remittances to India, but these contributions are not listed officially. They are either not coming, or are coming through the hawala route.

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Largest donors: Agency wise trends (in Rs cr)

Donor Name & Country	2009-10	Donor Name & Country	2008-09
Gospel For Asia Inc USA	233	World Vision  International USA	706
Fundacion Vicente Ferrer, Barcelona, Spain	229	Gospel For Asia Inc USA	596
World Vision Global Centre, USA	198	Fundacion Vicente Ferrer, Barcelona, Spain	458
Compassion International, USA	132	Shyam Shyam Dham Samiti India	359
HCL Holdings Pvt Ltd, Mauritius	94	Compassion International, USA	347
Om Foundaiton, USA	64	Fundacion Vicente Ferrer, Spain	241
Population Service International, USA	51	Action Aid International, UK	228
Oxfam GB, UK	45	BAPS, Inc USA	199
Save The Children, UK	44	Christian Children Fund, USA	197
EED-Evangeischer Entwickkugddienst e.v., Germany	44	Plan International, USA	191
University of Manitoba, Canada	41	Om Foundation, USA	188
Bill & Melnda Gates Foundation, USA	40	Ahmadiyya Muslim Association, UK	178
Plan International, USA	39	Mata Amritanandmai Centre, USA	176
SOS Kinderdorf International, Austria	34	The Global Fund to Fight aids, Tuberculosis, Malaria Switzerland	166
Wort and Tat Allgemeinel Mission, Geselischaft, Germany	29	Oxfam India Trust, UK	163
From Top 15 donors	1317		4393
Total Receipts in year	10338		10803

Contribution of top 15 donors as a per cent of total contributions was 13 per cent in 2009-10 and 40 per cent in 2008-09.

Big donors of 2008-09 like World Vision International USA and Gospel for Asia Inc USA, Fundacion VF Barcelona have reduced contributions very substantially.

Thus, World Vision International USA contribution dropped from Rs 706 crore (Rs 7.06 billion) to Rs 198 crore (Rs 1.98 billion) ; Gospel for Asia dropped from Rs 596 crore (Rs 5.96 billion) to Rs 233 crore (Rs 2.33 billion).

Yet, total contributions received into India from the US in the two years referred to above is about the same, so the probability of routing money through other organizations seems a distinct possibility and needs to be investigated.

Largest donors were Gospel for Asia Inc USA Rs 233 crore (Rs 2.33 billion), Fundacion Vicente Ferrer, Barcelona, Spain Rs 229  crore (Rs 2.29 billion), World Vision Global Centre, USA 198 crore (Rs 1.98 billion), Compassion International USA Rs 132 crore (Rs 1.32 billion).

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Top 15 Recipient Associations 2009-10 (in Rs cr)

Association	2009-10	Association	2008-09
World Vision of India, Tamil Nadu	209	World Vision of India, Tamil Nadu	192
Rural Development Trust, A.P.	151	Rural Development Trust, A.P.	155
Shri Sevassubramania Nadar Educational Charitable Trust, Tamil Nadu	94	Believers Church India, Kerala	100
Believers Church India, Kerala	88	Action Aid, Karnataka	77
Caruna Bal Vikas, Tamil Nadu	83	Shyama Shyam Dham Delhi	109
Women's Development Trust, Andhra Pradesh	80	Women Development Trust, A.P.	82
Sri Sri Jagadguru Shankaracharya, Karnataka	71	Plan International Inc, Delhi	66
Action Aid, Karnataka	66	Church Auxiliary for Social Action, Delhi	61
Bal Raksha Bharat, Delhi	66	Sri Sri Jagadguru Shankaracharya, Karnataka	60
SOS Children's Village of India, Delhi	62	Mata Amritanandmayi Math, Kerala	116
Love India Ministries, Kerala	62	Caruna Bal Vikas, Tamil Nadu	74
Oxfam Trust, Delhi	59	Boachasanwasi Akshar Purushottam Swaminarayan Sanstha, Gujarat	78
Plan International Inc, Delhi	55	Christian Children Fund Inc, Karnataka	62
Tibetan Children's village, Himachal Pradesh	53	Pratham Mumbai Education Initiative Maharashtra	67
Missionaries of Charity, West Bengal	53	SOS Children's Village of India, Delhi	83
Top 15 recipients received	1395	Top 15 recipients received	1382
Total Contributions received	10338	Total Contributions received	10803

Under Section 14 of FCRA, the book of accounts and records of 12 associations out of 38,436 were inspected by officials of the MHA. This is highly inadequate and is a reflection of the importance Government attaches to monitoring how foreign contributions are utilised.

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Trends of state wise receipt of foreign contributions (in Rs cr)

State	2009-10	%UP	2005-6	2002-3
1.Tamil Nadu	1663	-	1609	775
2. Delhi	1816	(8)	1556	881
3. Andhra Pradesh	1325	7	1012	630
4. Maharashtra	921	-	664	505
5. Karnataka	983	(3)	621	489
6. Kerala	892	(10)	656	409
7. Jharkand	160	-	97	58
8. West Bengal	559	(6)	355	272
9. Gujarat	394	(15)	301	272
10. UP	218	-	103	NA
11. Orissa	214	(6)	129	NA
12. MP	143	(10)	77	NA
13. Bihar	139	(16)	101	NA
14. Rajasthan	128	(7)	-	NA
15. Himachal P	145	12	83	NA
16. Assam	93		-	NA
17. Punjab	87		82	NA
18. Others	458		432	756
Total	10338	(4)	7,878	5,047

% increase between 2008-9 and 2009-10.

Most of the reported inflows are concentrated in the four southern states, Delhi and Maharashtra. Why?

Since 2005-06, Tamil Nadu has consistently received foreign contributions of more than Rs 1600 crore (Rs 16 billion) p.a., peaking at Rs 2,118 crore (Rs 21.18 billion) in 2006 07.

Kerala received a minimum of Rs 800 crore (Rs 8 billion) p.a. since 2006-07, peaking at Rs 991 crore (Rs 9.91 billion) in 2008-09.

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Top recipient districts of foreign contributions (in Rs cr)

District	2009-10	2007-8	2002-3
Chennai	872	731	363
Mumbai	607	470	284
Ranchi		-	NA
Bengaluru	702	670	358
Kolkatta	341	352	NA
Uttara Kanada	-	-	NA
Hyderabad/Sec	334	291	181
Ananthpur	414	278	169
Quilon	324	250	-
Ahmedabad	219	207	NA
Tirunelveli	-	-	NA
Madurai	177	187	NA
Quillon	-	-	NA
Ernakulam	226	207	NA
Pune	186	173	NA
Krishna	158	134	NA
Tiruchirapali	-	96	NA
Kancheepuram	112	122	NA
Trivandrum		-	NA
KangraDharamsala	145	104	NA
Kottayam	106	NA	NA

Among the districts, the largest recipients of contributions were Chennai Rs 872 crore (Rs 8.72 billion), Bengaluru Rs 702 crore (Rs 7.02 billion), Mumbai Rs 606 crore (Rs 6.06 billion), Ananthapur Rs 414 cr (Rs 4.14 billion), Kolkatta Rs 341 crore (Rs 3.41 billion), Hyderabad/Secunderbad Rs 334 crore (Rs 3.34 billion), and Quilon Rs 323 crore (Rs 3.23 billion).

These are huge sums of money that require continuous and serious monitoring to ensure that end utilization matches the purported purposes for which the monies were received.

Tamil Nadu and Chennai district have been amongst the largest recipient of foreign money for many years now. This was known to the Government all along. So why has the PMO woken up to the perils of foreign money now?

Because foreign money has been used to delay commissioning the Koodankulam nuclear power plant? As we have seen in the past, any policy matter that has the words 'nuclear', such as nuclear power or Indo US Nuclear deal, makes the Prime Minister unnaturally assertive and stubborn, notwithstanding threats from UPA allies.

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Some information about donor organisations

Mission of World Vision International USA - "WV is an international partnership of Christians whose mission is to follow our Lord and Saviour Jesus Christ in working with the poor and oppressed to promote human transformation, seek justice and bear witness to the good news of the Kingdom of God."

"In Sri Lanka the activities of WV raised a strong alarm. Lt Col A.S. Amarasekara of Sri Lanka wrote: "After George Bush Jr became the President of the US, he made a speech in which he said that he would no longer support developing countries through their respective governments but would channel American aid through the American Christian Relief Organizations in these countries. WV is one such organisation".

WV is very careful to keep its proselytising disguised. Excerpts from a Tehelka report "In, Mayurbhanj, again in Orissa, WV regularly organises spiritual development programs as part of its ADP package. WV supports local churches by organizing leadership courses for pastors and church leaders. WV India is active in Bhil areas and openly admits its evangelical intentions".

Gospel for Asia is a Texas based Christian missionary organisation. According to its site it is involved in child education, ministering lepers, natural disaster relief and literature distribution for character development and further understanding of Jesus Christ.

"In 2008, the Kerala home minister revealed that GFA had received Rs 1,044 crore (Rs 10.44 billion) in foreign donations in the last fifteen years. He added that the church has bought nearly 2,800 acres of land, including a 2200 acre rubber estate". Quoted from Breaking India by Rajiv Malhotra and Aravindan Neelakandan.

The website of Compassion International USA reads "Compassion believes that God's purposes on earth are accomplished through the Church - including His purpose of bringing justice and mercy to the world's poor and oppressed. That's why our program is carried out exclusively through indigenous, evangelical bodies of believers".

There are, however, organisations that receive foreign funds and doing excellent work.

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Utilisation of foreign contributions (in Rs cr)                                                                         

Expenditure Head	2009-10	2008-09
1.      Establishment expenses	1483	5022
2.      Rural Development	944	2835
3.      Relief/rehabilitation of natural calamities	267	1345
4.      Welfare activities for children	743	2304
5.      Construction/maintenance of schools/colleges	631	2031

A comparison of FCRA reports for 2009-10 and 2008-09 show that classification of expenses does not appear to be consistent.

For e.g. establishment expenses for 2008-09 as shown in the current year's report is Rs 1,330 crore (Rs 13.3 billion), while in the previous year's report as reflected above is Rs 5,022 crore (Rs 50.22 billion).

MHA acknowledges that it merely compiles the returns received by it into an annual report. Therefore, expenditure-wise heading stated above is neither properly audited nor scrutinised.

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Some ideas

The FCRA report states that the FCRA desk in the MHA is manned by a Deputy Secretary (foreign contribution) with four sections. Given the importance of monitoring foreign contributions and their impact on national security, the team needs to be strengthened.

Some former officials suggest the team should consist of an Additional Secretary FCRA, two Joint Secretaries, and two Deputy Secretaries with adequate number of under secretaries.

MHA needs to move away from being a centralized letter box, doing approvals and collating NGO accounts, and focus on field visits and audits instead.

MHA sponsored annual audits for all associations who receive annual contributions of over Rs 10 crore (Rs 100 million).

NGOs receiving Rs 5-10 crore (Rs 50 - 100 million) should be audited once in two years and those getting Rs 1-5 crore (Rs 10 - 50 million) once in three years.

The Reserve Bank of India has empanelled auditors for bank audits; MHA can empanel reputed auditors for NGOs to report whether money was spent on areas for which MHA approval was taken.

The deeper intent behind the Western world remitting thousands of crores into India annually needs to be probed and checked.

Weakening the Hawala network through continuous monitoring, arrests and convictions.

It is time the government woke up to the risks that uncontrolled foreign monies flowing to Indian NGOs pose to India's economic progress, social cohesion and national integrity.

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The author is a Chartered Accountant and founder of esamskriti.com