Center and Supreme Court tighten the screws to make NGOs more accountable for their actions

The Supreme Court on Wednesday directed the Center to try and enact a law which would ensure regulation of government funds and prosecution of those NGOs which indulge in misappropriation of funds or fail to file annual statements.

If enacted, such a law would be a welcome step, as according to a CBI report in 2015, out of about 31 lakh NGOs operating in the country which received their funds from the govt and/or abroad, only a paltry 10% had filed their balance sheet.

The Supreme Court bench stated that about 950 crores of the tax-payers’ money every year was being disbursed to various NGOs, hence a law which would regulate the working and funding of the NGOs would be a welcome step.

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This direction of the Supreme Court comes after the Center had submitted draft guidelines to the Supreme Court on 5th April which were intended to ensure greater accountability of NGOs and Voluntary Organisations (VO) which received Government funding.

These guidelines were submitted by the Additional Solicitor General Tushar Mehta after being directed by the bench of Chief Justice J S Khehar and Justice D Y Chandrachud.

These guidelines required the organisations to register afresh at the NGO Darpan portal operated by the NITI Aayog. This registration required details of the organisation’s past work, fund utilization, yearly audit reports and the key persons.

In the event of the organizations not utilizing or misusing the funds that were granted by the government, they would need to refund the whole or partial amount with 10% interest.

Furthermore a show cause notice would also be issued to the NGO to take corrective action if utilization certificate is not submitted or a material irregularity, missutilization or falsification is suspected. Plus in case of misappropriation of funds, a criminal investigation against key officials of the organisation would be initiated and the organisation would be blacklisted.

The Supreme Court bench though feels that these guidelines may not be enough as they may not be very effective in meeting the enormity of regulating about 30 lakh NGOs operating in the country.

While tighter norms may be a reality in the future, the government Council for Advancement of People’s Action and Rural Technology, which is responsible for disbursing funds to the NGOs, is doing its bit to ensure greater transparency. It has recommended that FIRs be filed against 159 NGOs for mishandling of funds and has also claimed to have blacklisted 718 NGOs for not following due process.

Even though this may be a good start, it might not be enough considering the number of organizations involved. But going by the events it is clear that NGOs won’t be allowed any financial free run just because they claim to be involved in working for the betterment of the society.


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