The government is very cagey about foreign funding to NGOs. But when its own funds to the voluntary sector get squandered, it does nothing to stop it. A new report by a think-tank says that thousands of crores of rupees to NGOs gets lost in what can be called a major scam.

“From 2002-03 to 2008-09, the central government and the state governments have provided Rs. 6,655 crores to NGOs but it goes unaccounted and is dire need of reform,” says the report titled ‘India’s funds to NGOs squandered’ by the Delhi-based think tank Asian Centre for Human Rights (ACHR), released here on Friday.

It adds that the centre and states/union territories such as Madhya Pradesh, Uttar Pradesh, Orissa, Jammu and Kashmir, Arunachal Pradesh, Mizoram, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep failed to provide information about the grants given to NGOs.

“These funds should have been transparently and efficiently spent on a clear set of well defined priorities that are determined in a democratic process. The government of India cannot claim to have fulfilled any of those conditions,” the report adds.

However, the report does not name any particular NGO for squandering government funds.

“The information of government funds to NGOs was gathered by using the right to information (RTI). 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,” said Suhas Chakma, director of ACHR. He also said there was lack of effective and transparent monitoring of funds provided by governments.

The report notes that at least Rs. 1,000 crore of government money gets wasted every year. It says that those NGOs close to government officials or with political connections are selected for grants. It states that governments often fund even blacklisted NGOs. “The fact that blacklisted NGOs are re-funded and the ministry of women and child welfare annually granted Rs 110 crore since 2006 to three organisations 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,” said Chakma.

The report said that 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.

Even though the government doesn’t know where its money is going, the grants to NGOs have only increased since 2002. “The funding given to NGOs is not subject to the comptroller and auditor general (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 20 years to recognise the malaise of funding by the ministry of environment and forest (MoEF). Therefore, CAG audit is too infrequent, inadequate and does not cover the NGOs,” Chakma pointed out.

The report says that the government only blacklists the NGO found to be committing irregularities and doesn’t go beyond that. “The CAPART under the ministry of rural development sanctioned 24,760 projects between September 1, 1986 and February 28, 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,” the report notes.

It suggested setting up of a “national grants-in-aid commission” through which all grants to the voluntary sectors to be routed and the “national grants-in-aid commission” be responsible for all aspects, like calls for proposals, selection of proposals, monitoring of implementation, review of reports, recovery of funds etc.

Read the report here.