Monday, 17 July 2017

Proposed new law to regulate NGOs

A recent report in the Times of India states:Decision in 4 weeks on new law to regulate NGOs, their funding. Here is a link to the report:

According to the report, the NDA government appears to have told the Supreme Court that a decision would be taken within four weeks “on the need for a standalone law to regulate activities, funding and expenditure of non-governmental organizations (NGOs), lakhs of which have mushroomed across the country.” What the NDA government has failed to add is the fact that many among these mushrooming NGOs are floated by politicians or their own relatives. 

Politicians and their political parties cannot receive funds from foreign sources under FCRA 2010. However, NGOs set up by their relatives, friends or supporters can! Politicians and their political parties cannot receive CSR funds from companies under section 135 of the Indian Companies Act 2013. However, NGOs set up by their relatives, friends or supporters can and reportedly do! Rightly has petitioner-cum-advocate M. L. Sharma been quoted in the aforesaid report to have said that till date, not a single NGO has been prosecuted, "because ninety per cent of NGOs are owned either by politicians or linked to bureaucrats".

The bench of Chief Justice of India J. S. Khehar and Justice D. Y. Chandrachud has said, "The issue is very serious. We do not want to push the government... Whether you want to enact a separate legislation or not, you have to take a decision … Previously, we found that not many have filed audited accounts. The government has already initiated civil and criminal proceedings against defaulting NGOs. So, it is not as if there is no legal framework available to take action." This view was based on the CBI having informed the Supreme Court that it had detected 32.97 lakh registered NGOs and voluntary organizations, but, less than ten per cent of them, 3.07 lakh, filed their audited accounts with the Registrar of Societies.

Once again, here the CBI has failed to inform the Supreme Court that many offices of the Registrar of Societies across India simply register societies and have no mechanism in place to regulate such societies. It is a known fact that even when NGOs in some states try to submit their accounts at the Registrar’s office, they are told that there is no need for them to do so.

Does the National Capital, New Delhi or for that matter Bangalore have a charity commissioner to regulate charitable trusts? The answer is in the negative. The failure is not on the part of the NGOs. The failure is on the part of the state governments for not having regulatory agencies in place.

On January 10, the Supreme Court had ordered government to scrutinize accounts of lakhs of NGOs and voluntary organizations, which together received thousands of crores of rupees of public funds, and take civil and criminal action if they were found to have misused the grants.
Later, on April 5, 2017, the Centre had filed in the Supreme Court draft guidelines to regulate NGOs and said all such organizations, which intended to receive funds from governments, must register afresh online with Niti Aayog's 'NGO-Darpan' portal giving details of their past work, fund utilization, yearly audit reports and key persons responsible for managing the NGO.

Additionally, a provision in the draft guidelines intends to deter non-serious NGOs from seeking government funds. It mandates NGOs and its office-bearers to execute a bond, equivalent to the fund amount received, promising to refund to the government with 10% interest the entire amount if the funds were found misused, misappropriated or not used for the purpose for which they were sanctioned.

Let’s wait and see what the government comes up with within four weeks. Till then let’s console ourselves saying: These are challenging times and these challenges should make us better and not bitter!

Noshir H. Dadrawala

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