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BOB MOON: They're known as non-governmental organizations, or NGO's for short. The term describes any organization
dedicated to various social pursuits, from the World Disarmament Conference to the AARP. A recent survey by the government in India found more than 3 million nongovernmental organizations
are registered in that country. That's one NGO for every 400 citizens there. While the government appreciates the help, it says that might be too many.
Raymond Thibodeaux reports from New Delhi.
RAYMOND THIBODEAUX: NGOs make up a growing, $8 billion-a-year industry here. What makes India such fertile ground for these nonprofit agencies?
THOMAS SHANDY: India has a beautiful story of economic growth on the one side, and on the other hand there's still a huge story of poverty.
That's Thomas Shandy, spokesman for Save The Children.
SHANDY: About 45 percent of the children are malnourished. We lose about two million children every year under the age of five. That is a terrible tragedy that is playing out on a daily basis.
Of course, not all NGOs care for the poor. Many focus on environmental or human rights issues, or serve as government watchdogs. Still, India is drawing up new rules to keep closer tabs on NGOs. It's targeting groups that are ineffective or lack transparency, including so-called "briefcase NGOs" that exist mostly on paper and mostly to swindle donors.
Shandy says the proposed laws have many NGOs worried.
SHANDY: The laws that are in the pipeline at the moment, if they are going to be passed, they are not going to be particularly good for NGOs in India.
Shandy says one of them is a tax on unspent donations. Supporters say the tax will stop otherwise tax-exempt NGOs from hoarding money meant for aid and development.
Mandakini Devasher, a researcher for the Accountability Initiative, welcomes the added scrutiny. But she says the government just needs to a better job enforcing the rules already in the books.
MANDAKINI DEVASHER: If, under law, the NGOs are submitting all this information to the government, the government needs to do its homework. It needs to do its due diligence to separate the wheat from the chaff.
Devasher says the federal agencies that monitor NGOs are too small to effectively carry out their watchdog role. So guess who's stepping in to help monitor the NGOs? You got it, more NGOs.
DEVASHER: It's only natural that NGOs would also pick up on that. There's been a push for greater openness in government. So in a way it's a kind of trickle-down effect.
For starters, many Indian NGOs have begun to voluntarily publish their annual reports online. Some analysts see it as a bid to stave off more regulation -- in effect, beating the government to the punch.
In New Delhi, I'm Raymond Thibodeaux for Marketplace.