WHERE does all that money go? That's the question causing the Indian Government much concern. The increasing free-flow of foreign money to voluntary agencies throughout the country, has, according to government estimates, shown a steep rise over the years. And yet, it has no foolproof way of monitoring to what exact use that torrent of money is being put to.
Funding from semi-government voluntary groups abroad ostensibly for religious and developmental purposes, is India's fastest growing economic transaction. Since 1976, when the Foreign Contribution Regulation Act (FCRA) first came into effect, there has been an ongoing effort to check illegal money coming to religious and other voluntary groups in the name of 'development'. But now, the FCRA itself is under scrutiny.
Increasing evidence, says one well-placed government official, shows that money coming in the name of voluntary work is being siphoned off by bigger political organisations through various fronts. This month, the Union Home Ministry sent notices to 25-odd top voluntary agencies—among them a dozen Hindu and Muslim organisations with ostensibly no links to political groups—demanding to know why they had not filed the annual returns of the hefty donations they had received. The FCRA requires all organisations to file their returns every year.
According to Vishwabandhu Gupta, additional commissioner, Income Tax, and president of the Indian Revenue Service Association (IRSA), there is a strong need to investigate many fundings. During a routine investigation in 1987 of returns filed, the senior income tax bureaucrat, found that the Vishwa Hindu Parishad (VHP) claiming 'charity' status, had applied for registration under the FCRA. He ordered a thorough probe into the VHP's claim that 10,000 of its branches across North America wanted to pour Rs 700 crore for 'charity' into India. Unfortunately, many other organisations who claim these benefits, also have strong political backing. Gupta was eased out of his post. The file, which was put on the backburner, is reportedly lying with the Prime Ministers' Office (PMO).
The worst perhaps, is that the funders call the shots. Says Swami Agnivesh, whose Mukti Pratishthan was till two years back, a recipient of foreign funds: "This system is donor driven. My aid was stopped the moment I refused to toe the western line on development."
Officials admit, however, that this is just the tip of the iceberg. "Information gathered from returns furnished by the associations, reveals that the receipt of foreign contributions during April 1993 to March 1994 was Rs 1,865.70 crore as compared to Rs 1,585.30 crore in 1992-93 and Rs 1,412.13 crore in 1991-92," reports a note circulated in the higher echelons of the Home Ministry.
The Government's concern stems from the increased funding of such organisations in perceived 'sensitive' areas of the country. Home Ministry documents show that Punjab tops the list of recipients followed by Manipur, Jammu and Kashmir, and Nagaland. Agencies in Kashmir, which received Rs 4.82 crore in 1992-93 gained Rs 7.90 crore the following year while the figures from Punjab show that in 1993-94 total contributions had increased by over 50 per cent. The suspicion is that some of these funds are used for political purposes, including destabilisation and subversion.
The FCRA is meant to regulate the acceptance and utilisation of contributions, "with a view to ensuring that parliamentary institutions, political associations and academic and other voluntary organisations may function in a manner consistent with the values of a sovereign democratic republic". Over 10,000 voluntary groups are registered under this act and are entitled to receive generous donations every year. Of them religious organisations accounted for Rs 221 crore, economic organisations Rs 213 crore, educational organisations Rs 317 crore, and social organisations Rs 428 crore. The associations are expected to submit applications for registration and at the end of each financial year are expected to file their returns and make available documents for the Government's perusal.
According to Gupta, many associations are using the loopholes in the FCRA to operate what is becoming a major racket. "I would even say it has become a conduit for hawala transactions. There are no checks," the official points out and reckons that not more than 10 per cent of these voluntary agencies are genuine.
Home Ministry officials say there is little they can do by way of maintaining checks. The system of funding remains convoluted. The Reserve Bank of India (RBI) is the distributing authority in conjunction with the Home Ministry. But the assessors are supposed to be the Income Tax Department, which comes very late into the picture. "So the left hand does not know what the right is doing," an official points out.
Monitoring the use of donations is almost impossible under the current system because there is little infrastructural backup. The feedback that the government and specifically the Home Ministry receives, is from the various local stations of the Intelligence Bureau (IB) and Special Branches of the state police. Given the number of associations that flourish under state patronage, assessment becomes difficult. In Delhi alone there are 480 such associations while Maharashtra has 989; Tamil Nadu has a whopping 1,763, while Karnataka has 1,344 voluntary organisations. Smaller states like Assam have 127, while even smaller Manipur has 140.
Inspections, when they take place, are rather laconic. The usual situation: a government agency lands up at an association which has been put on the 'scrutiny' list of the Home Ministry. The team is taken on a 'conducted tour' and in a matter of hours must assess whether all is well. That becomes the basis of the assessment report that reaches Delhi for future action. Points out an intelligence official: "With the amount of political snooping we have to do, it is difficult to conduct a genuine assessment of how the money is being utilised by these organisations."
Investigations show that often families operate as agencies. In one case, an association registered at Gwalior had the lady of the house as the boss of an 'association', while her US-based husband was the 'donor'. This enabled them to enjoy the tax exemption given to these organisations.
Worse are the free-flowing funds into the tribal areas of the country, which account for 17.76 per cent of the foreign contributions received. Of them Andhra Pradesh tops the list followed by Bihar, Madhya Pradesh and Orissa. Nagaland has the maximum percentage increase followed by Andhra Pradesh and Orissa. In Madhya Pradesh, the state Home Department is inquiring into cases of sporadic conversions, possibly funding related, in the Bastar tribal district early this year. The bulk of recipients are, however, in south India which has a turnover of Rs 855 crore, as compared to the north which accounts for Rs 422.37 crore. A CID special report from Tamil Nadu identified two registered organisations involved with conversions in the Mallipuram area.
"The act needs serious review. It is an economy within an economy," says Vikram Diesh, general secretary of Janshakti, an organisation that has in its ranks people like T.N. Seshan, K.J. Alphons and G.R. Khairnar. Diesh points out that the total money allocated in the Central budget for primary education is less than the Rs 317 crore that came by way of foreign funding in 1993-94 alone.
With the demand for a review of the act growing shriller, the Estimates Committee of the Parliament has come up with two significant proposals. One is to reduce the permanent nature of fund receiving, putting a time limit on the period funds may be received and secondly, to make the law more stringent.
The flip side is that genuine voluntary groups trying for registration have been turned away on specious grounds. This has given rise to charges of rampant corruption and graft. The Government has in its possession a list of 20 such agencies which were entitled to be registered, but were turned down.
There have been suggestions that Parliament take a fresh look at the FCRA and plug the loopholes. But when that will happen, is anybody's guess.
