US, United Kingdom and Germany are the biggest donors for Indian voluntary sector but contributions from smaller countries such as Luxembourg and Liechtenstein are on the rise.
Latest data available with the ministry of home affairs on annual donor wise details show that annual donations from these two countries, known as tax havens, has increased between 70% to 90% between 2006-07 and 2008-09.
Luxembourg, a country with a population of five lakh and spread in an area of 2,586 sq kms, donated Rs 13.44 crore in 2006-07. In 2008-09, the annual donation from there to Indian NGOs increased to Rs 23.30 crore despite the country fighting with debt ridden economy.
Donations from much smaller Liechtenstein having population of 35,000 people were relatively less. In 2006-07, it was 3.58 crore which increased to 6.36 crore in 2008-09.
In comparison, donation from United States increased from 2,949 crore to Rs 3,433 crore and from United Kingdom dipped from Rs 1,427 crore to Rs 1,114 crore during the same period. Money from other European nations witnessed an increase of less than 5%.
The Indian government in 2009 had received a list of 15 persons from German government who has alleged black money stashed in LGT banks in Liechtenstein under the India-Germany DTAA. Assessments have been made against total 18 individual and penalty proceedings for concealment of income have separately been initiated in all these cases.
The sharp spike in FCRA inflow from tax havens raises suspicion about `round tripping’ of black money by Indian entities. Round tripping refers to routing of investments by a resident of one country through the other country back to his own country.
Along with these two countries, another surprise package in the list of donor countries was Grenada, an island nation in Caribbean Sea. It gave Indian NGOs a whooping Rs 332.89 crore in 2006-07. The funding diminished in subsequent years with Rs 35.99 lakh in 2007-08 and Rs 1.67 lakh in 2008-09, as per data made available to Parliament in March 2011.
The home ministry, which regulates foreign funding to voluntary sector through Foreign Contribution Regulation Act, does not investigate the source but only whether the money is spent as per norms or not. “We can investigate only spending by Indian NGOs,” a ministry official said.
After scrutinizing annual returns of thousands of NGOs, which receive foreign funding, the MHA has placed 41 organisations under the category of prohibited to receive foreign remittances.
Most of these organizations are religious in nature including J&K Muslim Conference based at Srinagar, Christ’s Helping Hand Children’s Home in Andhra Pradesh, Saraswati Charitable Trust in Delhi and Haryanvi Organisation for Progress and Ecology.
Another 34 organisations have been placed under the prior permission category whereas accounts of 11 voluntary sector bodies have been frozen, as per the information provided to Parliament in March 2011.
The ministry has also asked the Central Bureau of Investigation to conduct investigation regarding utilization of funds received by nine organizations, which includes South Asia Human Rights Documentation Centre, Khwaja Khushai Charitable Trust, Mujufarnagar, Indian Institute of Community Development, Dehradun and Reach Valley View Academy, Indore.
But, major contributors to Indian NGOs continue to be United States and European countries. “Most of the donations are from Indians in these countries as grant from development agencies in rich world has shrunk,” said Rajesh Tandon, head of Delhi based Society for Participatory Research in Asia, that works in backward areas.
Around Rs 9,400 crore came from donors in US between 2006-07 and 2008-09 followed by Rs 3,870 crore from United Kingdom and Rs 3,107 crore from Germany. Donations from Switzerland, Netherlands, Italy, France, Australia, United Arab Emirates and Austria were also high in these three financial years.
(With inputs from Gaurav Choudhury)