What happened to the Rs 94k crs that Indian NGOs received in 17 yrs

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PM wakes up to dollar driven NGO threat, screamed a newspaper headline. The Government has cancelled licenses of three such organizations 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 analyzing 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 It was repealed and FCRA 2010 was passed along with the Foreign Contribution Regulation Rules 2011.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 organization 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 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 scrutinizes 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 organizations. 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.

Trends in Foreign Contributions
Indian NGOs received a staggering Rs 94,520 crs from 1993-94 to 2009-10.

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

Trends in Foreign Contributions

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% 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 crs 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 crores with zero accountability to the Government.

Largest Donors Country wise

Rs crs
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?