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Watch the watchdog

india Updated: Oct 22, 2011 14:25 IST
Highlight Story

Amid the euphoria over the conclusion of Anna Hazare’s fast for the Lokpal Bill, a few dissenting voices were heard on two issues: first, the means that were used to force the government’s hand and, second, too much power and responsibility is thrust on one institution, the office of the Lokpal.

The first criticism can be more easily defended than the other concerns. The government’s record of not listening to genuine grievances unless extreme measures are taken leaves few options open for genuine protestors. But the second argument can’t be dismissed. It is true that it is Parliament that is accountable to the people and can be kept reasonably honest by a wide variety of institutions, provided they themselves are reformed and made accountable. It is also true that civil society’s most valuable role is that of a watchdog. But to whom is civil society accountable?

At the risk of breaking ranks, I have to admit that civil society needs reforms in governance if it wants to retain the moral high ground. According to a 2009 official estimate, there are around 3.3 million civil society organisations (CSO) and the amount of investment in this sector is quite substantial. Over the years, State funding of CSOs have also seen a steady rise, thanks to the aam aadmi thrust of the government. Many outreach programmes of the government are carried out through CSOs.

While there have been no major scams involving misuse of funds by CSOs comparable to those elsewhere, misuse of resources is nevertheless significant enough to cause concern to civil society leaders themselves. There are known instances of fictitious NGOs being registered to corner grants and charitable funds being used for private benefit. Creative accounting has also reached a new high. In many cases, the outcomes of programmes are commensurate with the amounts spent on them. While foreign donations to CSOs are monitored closely under the Foreign Contributions Regulation Act (FCRA) and by the bigger aid donors themselves, what about those programmes that get government funding? Since government funds are generated from the taxes we pay, the public has a right to know whether CSOs are using them properly.

Addressing the National Academy of Audit and Accounts recently, vice-president Hamid Ansari strongly underscored the need for the Comptroller and Auditor General (CAG) of India to screen non-profits, societies, trusts and autonomous organisations. This suggestion deserves serious consideration. Some will argue that CSOs are already subject to independent financial audits and that the audit reports are filed before the income-tax department; that they also have to comply with the reporting requirements of several other authorities including the Registrar of Societies, charities commissioners, and the Registrar of Companies in case of registration under Section 25 of the Companies Act, not to mention the restrictive compliance demanded by the FCRA. So another layer of scrutiny is unnecessary, and it will only further restrict the autonomy of an already over-regulated sector.

It will also be pointed out that NGOs resort to self-regulation, and that organisations such as Credibility Alliance are moving CSOs to voluntary compliance with guidelines to ensure transparency, accountability and good governance. But experience shows that even independent audits are not always rigorous and don’t verify outcomes on the ground. Nor are the audited accounts in the public domain. As for voluntary regulation, the number complying with the guidelines is still low.

But while the CAG or other public audit is welcome, there must be some caveats: first, any audit by the CAG should be limited to government funds above a certain threshold; second, the audits must keep the distinctiveness of NGO operations in mind, and audit personnel must be trained to understand how NGOs function. In any case, the CAG audit of CSOs should be only an interim measure until independent national and state-level charities commissions, on the lines of those present in Britain, are established to deal comprehensively with civil society. They should be charged with policy and promotion as well as regulation. They should be created by legislation with their own statute, regulations and resources and their mandate would be to simultaneously protect the public interest and to provide effective support to civil society.

Pushpa Sundar is the author of Foreign Aid for Indian NGOs: Problem or Solution? The views expressed by the author are personal.