This story is from April 20, 2017

NEW DELHI: The government has revoked the registration of Public Health Foundation of India (PHFI), an NGO funded by Bill & Melinda Gates Foundation, under the Foreign Contributions (Regulation) Act over alleged misuse of foreign funds for anti-tobacco lobbying, in violation of FCRA norms.The home ministry’s revocation of renewal of PHFI’s FCRA licence has rendered it ineligible to receive any funding from abroad. A source said the main FCRA violation charge against the NGO, which has also worked in partnership with the ministry of health and family welfare, is that it had used foreign funds totalling Rs 43 crore to lobby with parliamentarians, media and government on tobacco control issues, which is not one of the five permitted activities under FCRA.The five permitted activities for which NGOs can receive foreign contributions include social, cultural, religious, educational and economic. PHFI was registered under FCRA under the head “social and educational”.According to a home ministry official, PHFI received around Rs 43 crore for tobacco lobbying, which it misrepresented as ‘research grants’ in its FCRA returns. The officer added that an NGO was not permitted to lobby for tobacco control, which could only be done by an entity as a public relations company that must pay due taxes.“Anti-tobacco lobbying is a valid and perfectly legal activity but not through zero-tax NGOs,” the officer told TOI.According to a source, PHFI received foreign contributions amounting to nearly Rs 150 crore in 2014-15 and Rs 200 crore in 2013-14. Bill & Melinda Gates Foundation accounted for nearly one-third of its foreign funding, USAID for around 10%, while the remaining donors included some leading western pharmaceutical companies such as GlaxoSmithKline.PHFI, in a release issued on Wednesday, said it had received a notification from the home ministry regarding renewal of its FCRA Registration. “Certain observations have been made by the ministry on utilisation of funds related to PHFI’s projects on tobacco, HIV/AIDS and its financial reports. PHFI has submitted the requisite information and documents to the MHA on the observations raised in the notification and provided the needed clarifications.“PHFI is seeking an early resolution of the issue and continuation of the FCRA registration, based on the clarifications provided,” it stated.As per the PHFI website, the NGO was launched by former Prime Minister Manmohan Singh in 2006. The NGO provides technical assistance to central and state governments in several areas of engagement including HIV prevention, access to drugs, tobacco control and immunisation, etc. Many of these activities have been in partnership with the ministry of health and family welfare.</s>India's government has canceled permission for foreign funding for one of the country's main public health organizations, whose donors include the Bill and Melinda Gates Foundation.

It's the latest move by Prime Minister Narendra Modi's government in cracking down on charities and nonprofits that receive funds from overseas and are often criticized for working against national interests.

Rajeev Chhibber, spokesman for the Public Health Foundation of India, said Friday that the organization received a letter from the Ministry of Home Affairs saying it lost its registration to get foreign money last week. Chhibber said the Gates Foundation was among the larger donors to the group, which gets about 45 percent of its funding from overseas. Other donors include the United Nations and the World Health Organization.

The ministry had specifically asked the group to explain its spending on HIV/AIDS and anti-tobacco programs.

In a statement, Chhibber said all the programs run by the Public Health Foundation were in step with the Indian government's National Health Policy. The organization also provides technical assistance to the federal government and several state governments on several subjects including tobacco control and HIV/AIDS.

Chhibber said the organization had submitted all the required documents to the ministry. He said his group is seeking "an early resolution of the issue" and continuation of its registration under the Foreign Contribution Regulation Act.

India began cracking down on foreign-funded charities after a government intelligence bureau report said economic growth was hurt when certain groups rallied communities against polluting industries.

Over the last two years it has accused the groups including Greenpeace, Amnesty International and Action Aid of providing reports "used to build a record against India and serve as tools for the strategic foreign policy interests of Western governments."

In February the government blocked foreign funding to Compassion International, a U.S.-based Christian charity, amid allegations that it was using its charity work as a front for religious conversions. The group shut down its program, which worked largely with poor children in India.</s>India's government has canceled permission for foreign funding for one of the country's main public health organizations, whose donors include the Bill and Melinda Gates Foundation.

It's the latest move by Prime Minister Narendra Modi's government in cracking down on charities and nonprofits that receive funds from overseas and are often criticized for working against national interests.

The Public Health Foundation of India also partners with the Indian government on several projects.

The group's spokesman Rajeev Chhibber said Friday that the organization received a letter from the Ministry of Home Affairs saying it lost its registration to get foreign money last week.

The ministry had specifically asked the group to explain their spending on HIV/AIDS and tobacco programs.</s>The Ministry of Home Affairs has barred Delhi-based NGO Public Health Foundation of India (PHFI) from receiving foreign funds for violating Foreign Contribution (Regulation) Act. Bill and Melinda Gates Foundation, the largest transparently operated private foundation in the world, is reported to be one of the biggest donors to the NGO.

PHFI, which is registered under FCRA, aims at strengthening training, research and policy development in public health spheres ranging from HIV prevention, access to drugs, tobacco control and immunization to environmental health, universal health coverage, public health cadre development and capacity building of primary care physicians.

According to reports, MHA took the step after they found that PHFI was allegedly violating provisions of FCRA by "diverting" foreign funds for purposes other than those the money was intended for.

PHFI has also been accused of lobbying with parliamentarians and media for the anti-tobacco lobby. Moreover, it has also been alleged that PHFI had also opened bank accounts which the ministry was not aware of. "Misreported" foreign donations were reportedly deposited in these accounts over the past three years.

Meanwhile, PHFI has said that the issue will be resolved soon. "PHFI has received notification from the Ministry of Home Affairs (MHA) — FCRA Wing regarding the renewal of its FCRA registration. Certain observations have been made by the Ministry on utilisation of funds related to PHFI's projects on tobacco, HIV/AIDS and its financial reports," a PHFI spokesperson told Indian Express.

The spokesperson also said that PHFI has submitted requisite information and documents to MHA on the observations highlighted in the notification and has already provided the needed clarification. "PHFI is seeking an early resolution of the issue and continuation of the FCRA registration, based on the clarifications provided," said the spokesperson.

"We have submitted all relevant documents and information to the ministry and are now waiting for a response," said K Srinath Reddy, a noted public health expert who heads PHFI.</s>THE Public Health Foundation of India (PHFI), a Delhi-based NGO that aims to strengthen training, research and policy development in public health, has been barred from receiving foreign funds including from the Bill and Melinda Gates Foundation (BMGF). The Union Home Ministry has cancelled PHFI’s registration under the Foreign Contribution (Regulation) Act, alleging violations of the law. PHFI’s licence was renewed for five years in August 2016, said officials.

Headed by noted public health expert K Srinath Reddy, PHFI — it was launched by former Prime Minister Manmohan Singh in 2006 — provides technical assistance to Central and State Governments in several areas ranging from HIV prevention, access to drugs, tobacco control and immunization to environmental health, universal health coverage, public health cadre development and capacity building of primary care physicians.

The RSS-backed Swadeshi Jagran Manch had recently alleged a nexus between the Gates Foundation and big pharma and its “influence” on health policymaking. Speaking to The Indian Express, co-convenor Ashwini Mahajan said: “We have met the Union Health Minister and raised the matter regarding funding of PHFI by BMGF.” According to the Home Ministry, the PHFI license has been cancelled for alleged FCRA violations. These include alleged lobbying with parliamentarians and media for the anti-tobacco lobby. It was further alleged that PHFI had opened bank accounts which were not disclosed to the ministry and had “misreported” foreign donations received over the past three years. Officials claimed the NGO had transferred significant sums outside India without alerting the Home Ministry.

In an e-mail response to The Indian Express, the PHFI spokesperson said, “PHFI has received notification from the Ministry of Home Affairs (MHA) — FCRA Wing regarding the renewal of its FCRA Registration. Certain observations have been made by the Ministry on utilisation of funds related to PHFI’s projects on tobacco, HIV/AIDS and its financial reports. PHFI has submitted the requisite information and documents to the MHA on the observations raised in the notification and provided the needed clarifications…PHFI is seeking an early resolution of the issue and continuation of the FCRA registration, based on the clarifications provided.”

Reddy was quoted by PTI as saying: “We have submitted all relevant documents and information to the ministry and are now waiting for a response.” According to the PHFI’s website, the chairman of the executive committee of its governing body is Infosys founder N R Narayana Murthy and members include former deputy chairman of Planning Commission Montek Singh Ahluwalia and Health Secretary C K Mishra. The website claims that several Central departments and state governments of Gujarat, Telangana, Odisha, Meghalaya, Karnataka and Delhi as collaborators along with a range of academic institutions in India and overseas including WHO, World Bank, All India Institute of Hygiene and Public Health and the National Human Rights Commission.

After the NDA government came to power in May 2014, FCRA licenses of around 20,000 NGOs have been cancelled by the Home Ministry. Of these, the FCRA licenses of over 9,500 NGOs were cancelled in 2015. Among them were senior advocate and former Additional Solicitor General (ASG) Indira Jaising’s NGO, Lawyers Collective (LC), Greenpeace, and Teesta Setalvad-run Sabrang trust.

The Home Ministry also toughened its stand in the case of Compassion International (CI), the Colorado-based child rights donor agency and despite US pressure refused to remove it from the prior permission category. Last year, three US NGOs George Soros-run Open Society Foundation; World Movement for Democracy and National Endowment for Democracy (NED) were put under prior permission category.

For all the latest India News, download Indian Express App now</s>As a popular adage goes, "Rome wasn't built in a day." There are times in history when the foundation for an empire was quietly built and the world realized it only later.

While we are busy discussing policies ranging from protectionism to immigration in the United States, India quietly laid the foundation for a technology empire that is going to digitally connect 17% of humanity. The full potential of India's push for digitization will be realized in time, but in my mind this is perhaps the most exciting technology development happening in the world today.

Below I will highlight why investors should not ignore these developments and why they may be under-weight India even by its current economic size.

Unorganized employment in India forms a substantial part of the economy, employing nearly 85% of its 500 million-strong work force. Add to it king cash, which forms nearly 80% by value and 98% by volume of all financial transactions, and you are left with the world's sixth biggest economic machine remaining largely unorganized and unnetworked!

India's reliance on cash, which is often untaxed and unaccounted for, rivals the highest cash users in the emerging market (EM) world.

All of the above is about to change! As a first step in networking this economic superpower, in the last few years, the government of India has pulled off multiple feats that, in my opinion, the world has never seen before.

India has adopted and almost finished a biometric framework, Aadhaar, that uses fingerprints and retina scans of nearly 99% of its population, which essentially means 17% of humanity.1

This sophisticated biometric database-still missing in the Western world-is being used to connect every way an individual interacts with the overall economy. This will revolutionize the entire economy.

When WisdomTree spoke about this with the then-finance minister of India in 2015, little did we know about the seriousness of the Modi government's push for banking for everyone.

Over the last year and a half, more than 270 million newer bank accounts have been opened with more than 665 billion rupees coming into formal banking.2 If this weren't enough, all these accounts are linked to the biometric information, increasing efficiency in processes ranging from tax audits to transfer of welfare money and the elimination of middlemen.

In 2016, India launched its own Dropbox, basically a vault secured by users' biometrics to save and share all the information needed for daily transactions. It is called IndiaStack.

This interface is a one-stop shop available at the swipe of a thumb for all daily transactions a citizen needs to do-opening a bank account, buying and selling securities, paying bills, transferring money. This biometric connection will make India's economy much more efficient.

Prime Minister Narendra Modi's bold step to demonetize 86% of currency3 in November 2016 seems to have accelerated India's economy toward cashless transactions.

Digital transactions increased 1,000% in December 2016.4 This also recapitalized India's banks with a much-needed $100 billion and widened the government's tax collection.

Thus, as India quietly lays the foundation to re-engineer its economic machine, we have an economy that is close to breakout velocity. While many talk of moving toward digital currencies, India has taken the most aggressive steps to formalize and digitize its entire economy.

Why Investors May Be Under-Weighting India

This all leads to a key question: Am I allocating to India correctly?

Investors often paint EM as one block and benchmark to the MSCI Emerging Markets Index. While this may give them very broad market cap EM exposure, it does not give them true economic exposure. In my opinion, investors are under-weighting India by allocating to the MSCI EM Index. Here is why:

India's contribution to EM nominal GDP is around 17%; however, compared to its economic size, its allocation in MSCI EM is nearly half (i.e., 8.8%).5

Even if we forget about the impact of current reforms on future economic growth, we are still under-weighting India by tracking a market capitalization-weighted index like the MSCI EM Index.

As India's market opens up for foreign investors and more foreign capital comes into the economy as a result of improving sentiments and liberalization of the economy, India's market capitalization should increase.

Thus, investors looking for a true economic exposure should likely adopt a strategic over-weight to India compared to general market capitalization-weighted benchmarks.

Usually the perception of India has been that of a country with significant potential but a very unorganized and messy system. As India networks its $2.4 trillion economy, it's more than a trillion dollars of annual retail purchases, 1.2 billion people and 430 million Internet users6, we are witnessing a new era in the way it conducts business. This is going to remain one of the great investment opportunities of the next decade.
• Government of India, as of 2/28/17.
• Government of India, as of 12/31/16.

Investments in emerging, offshore or frontier markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments.

Investments focused in India increase the impact of events and developments associated with the region, which can adversely affect performance.

Gaurav Sinha is currently working as Asset Allocation Strategist at WisdomTree since November 2014. He is leading the Portfolio Analytics and Solutions team and builds specialized investment solutions along with customized analytics for our clients. He is also deeply involved in advancing WisdomTree's product suite, and has particular expertise on India. Gaurav came to WisdomTree after stints at World Bank, Morgan Stanley and recently with Windhaven Investment Management. He received his Masters in Financial Engineering from Columbia University in 2009 and holds a bachelors Engineering degree from the prestigious Indian Institute Of Technology (IIT).
The Government of India revokes the Public Health Foundation of India's registration, allegedly for foreign-funded lobbying practices.