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NGO money mismanagement leaves Supreme Court fuming

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By Anirudh Singla

On the basis of a PIL filed by advocate M.L. Sharma in 2011, a three- judge bench of the Hon’ble Supreme Court, comprising of Chief Justice J.S. Khehar and Justices N.V. Ramana and D.Y. Chandrachud, mandated an audit for mismanagement of public funds of more than 30 Lakh non-governmental organisations (NGOs).

Where is all the government money?

Several NGOs that were operating in the country and receiving state and central government funding, to the tune of over Rs. 11,000 crores, were brought under scrutiny.

The facts as put forth by the Central Bureau of Investigation (CBI), asserted that only three lakh of about 32 lakh NGOs file their balance sheets with the government.

Between 2002 and 2008, the Centre and state governments had sponsored Rs. 4,756 crore Rs. 6,654 crore respectively, to the NGOs.

Chief Justice Khehar, considering the obliviousness of the legislature towards the General Financial Rules, 2005, which command a regulatory mechanism for NGO’s, questioned the Legislature by saying, “This is your [government] money and you have no record of how they [NGOs] use it?”

A new approach

Advocate Sharma based his argument on the grounds of unaccountability of the crores of rupees given to NGOs and the absence of a mechanism to monitor and streamline the funds. The order was passed after the Bench considered the report of amicus curiae, Rakesh Diwedi, and contentions put forth by the counsel for the parties. The Court observed that substantial funding is allowed for NGOs and substantiated by rules 210-212 of the General Financial Rules, 2005, despite uninformed respondents about the same.

No mechanism to moniter the money | Picture Courtesy : Pixabay

The Council for Advancement of People’s Action and Rural Technology (CAPART) is required by the Hon’ble court to complete the audit by March 31 and submit a report. It demanded accountability for the public money allotted to the NGOs by CAPART and other departments. The Central Government was also directed frame guidelines with respect to accreditation of NGOs and maintenance of their accounts and auditing in case of misuse of funds. Lastly, the Hon’ble bench agreed to the inefficiency and inadequacy of the measure to blacklist NGOs who do not file statements and suggested actions, including criminal proceedings, against serious
offenders.

Transparency is the key

If any public money is handed over to NGOs, and other similar social bodies, they must be managed and utilised in good faith

If any public money is handed over to NGOs, and other similar social bodies, they must be managed and utilised in good faith. Apart from the CBI’s report, there are several NGOs operating discreetly that are able to escape liability due to insignificant coverage of law. I believe that the Central Government must do more to find those in violation of law and set up regulatory frameworks that facilitate termination of these malicious entities who take advantage of the law. Only then can we trust the NGOs to use our money in a reasonable and responsible manner.


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