Table of Contents
"Substantially Financed" under RTI — The Section 2(h) Test
In one line: Section 2(h)(d)(i) of the RTI Act brings a non-government body within the Act if it is “substantially financed, directly or indirectly by funds provided by the appropriate Government”. The Supreme Court in Thalappalam Service Coop. Bank Ltd. v. State of Kerala, (2013) 16 SCC 82, set the governing test: “substantial” means a dominant or near-complete reliance on State funding — usually above 50 percent of the body's working capital or operational budget.
Did you know? A one-time grant does not make a body substantially financed. The Supreme Court held in Thalappalam that the funding must be ongoing, substantial, and significant to the body's functioning. A cooperative bank receiving a small registration fee from the State is not substantially financed. A private school whose entire recurring cost is met by Central grants is.
Legal Basis
- Section 2(h) — “public authority” definition, including the four sub-clauses (a)-(d).
- Section 2(h)(d)(i) — non-government body “substantially financed” by government.
- Section 2(h)(d)(ii) — non-government body “substantially financed, directly or indirectly” by government.
The Thalappalam test — a practical checklist
- Does the body rely on government funds for over 50 percent of its operating expenses? If yes, strong presumption of “substantial”.
- Is the funding recurring (annual grant, salary support, capital advance) or a one-time contribution?
- Would the body continue to function without government funding? A cooperative bank receiving a small licence fee — yes. A private college receiving 90 percent of its salary budget from UGC — no.
- Is there government control on top of funding (nominated directors, audit, fee regulation)?
- Is the body a “creature of statute” — incorporated under a special law that subjects it to State oversight?
Worked examples
| Body | Substantially financed? | Reason |
|---|---|---|
| IITs, IIMs, NITs | Yes | Central funding + Central statute |
| UGC-funded private universities | Yes | 90 percent of salary costs paid by UGC |
| Aided schools | Yes | Teacher salaries fully paid by State |
| Cooperative banks (under Kerala Cooperative Societies Act) | No | Thalappalam — registration fees are not “substantial” financing |
| Fully private schools | No | Registration does not imply substantial financing |
| NGOs receiving occasional grants | Case by case | Depends on whether grants are the body's mainstay |
| PSUs (ONGC, SBI, LIC, IOC) | Yes | Government control + funding |
| Cricket associations | Contested | Land grants + tax concessions can add up |
Drafting strategy when the body denies coverage
Public authority status is a threshold question. If an RTI is denied on the ground that “we are not a public authority”, your first appeal and second appeal should demand findings on the Thalappalam test. Include in your appeal:
The respondent's refusal rests on the assertion that it is not
a public authority under Section 2(h). That assertion requires
an evidence-based finding on the Thalappalam test:
(a) What percentage of the body's recurring operating expenditure
is met by government funds, directly or indirectly?
(b) Is the funding continuing, substantial, and material to
functioning?
(c) What controls does the government exercise over the body?
A non-speaking order on these three questions cannot dismiss the
application.
Landmark rulings
- Thalappalam Service Coop. Bank Ltd. v. State of Kerala, (2013) 16 SCC 82 — the governing test. “Substantial” means materially significant, usually over 50 percent of working funds; registration or regulatory oversight alone does not qualify.
- DAV College Trust & Management Society v. Director of Public Instruction, (2019) 9 SCC 185 — reaffirmed Thalappalam and held that private colleges receiving government aid for faculty salaries are public authorities.
- R.S. Misra v. Registrar, Supreme Court of India, Delhi High Court (2017) — the Supreme Court (administrative side) is a public authority covered by Section 2(h)(a) via Section 28.
Call to action
When a private body denies coverage, file a Section 18 complaint to the Information Commission asking for findings on the three Thalappalam questions. The Commission has original jurisdiction and can direct disclosure if the body qualifies.
Related
Sources
- Right to Information Act, 2005, Section 2(h).
- Thalappalam Service Coop. Bank Ltd. v. State of Kerala, (2013) 16 SCC 82.
- DAV College Trust & Management Society v. Director of Public Instruction, (2019) 9 SCC 185.
Last reviewed on: 20 April 2026