DAILY NEWS ANALYSIS
10 May, 2020
10 Min Read
Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund, or the PM CARES Fund, was set up to tackle distress situations such as that posed by the COVID-19 pandemic. In one-and- a-half months, the fund has raked in thousands of crores worth of donations including unlimited tax-free contributions from major corporates.
Who may contribute to the fund?
The fund receives voluntary contributions from individuals and organisations and does not get any budgetary support.
Donations have been made tax-exempt, and can be counted against a company’s corporate social responsibility (CSR) obligations.
It is also exempt from the Foreign Contribution (Regulation) Act, 2010, and accepts foreign contributions, although the Centre has previously refused foreign aid to deal with disasters such as the Kerala floods.
The Prime Minister chairs the fund in his official capacity, and can nominate three eminent persons in relevant fields to the Board of Trustees.
The Ministers of Defence, Home Affairs and Finance are ex-officio Trustees of the Fund.
Does not India already have a fund with similar objectives?
Yes. The Prime Minister’s National Relief Fund (PMNRF) was set up in January 1948, originally to accept public contributions for the assistance of Partition refugees.
It is now used to provide immediate relief to the families of those killed in natural calamities and the victims of major accidents and riots and support medical expenses for acid attack victims and others.
The PMNRF was originally managed by a committee which included the Prime Minister and his deputy, the Finance Minister, the Congress President, a representative of the Tata Trustees and an industry representative.
However, in 1985, the committee entrusted the entire management of the fund to the Prime Minister, who currently has sole discretion for fund disbursal. A joint secretary in the PMO administers the fund on an honorary basis.
As of December 2019, the PMNRF had an unspent balance of ?3,800 crore in its corpus.
States also have similar Chief Minister’s Relief Funds, and State governments have appealed for donations noting that they bear the major burden of implementing COVID-19 relief operations.
Are donations pouring in?
In its 45-day existence, PM CARES has attracted a large amount of donations. In the first week, news reports suggested that publicly declared donations added up to at least ?6,500 crore.
In the month since then, lakhs of public and private sector employees have donated a day’s salary to the fund, with some claiming it was done without their permission or knowledge. Among major donations include ?500 crore from employees of the Defence Ministry, Army, Navy, Air Force and defence public sector units, as well as ?500 crore each from the Tata Group and Reliance Industries.
Issues in PM CARES Fund
1. Protests have been raised against companies such as Reliance which have made major donations to PM CARES even while cutting salaries of their own employees, as well as the Railways, which donated ?151 crore to PM CARES, but could not provide free transport for destitute migrant workers.
2. Opposition leaders have questioned the need for a new PM CARES Fund, given that the PMNRF has similar objectives.
3. The Centre has not responded to queries on how much money is in the PM CARES Fund, or how and when it will be used to provide relief.
4. It is not clear whether the fund comes under the ambit of the RTI Act or oversight by the Comptroller and Auditor General of India, although independent auditors will audit the fund. (One RTI query to the PMO by activist Vikrant Tongad was refused, citing a Supreme Court observation that “indiscriminate and impractical demands under RTI Act for disclosure of all and sundry information would be counterproductive”)
5. The PM CARES web page is opaque regarding the amount of money collected, names of donors, the expenditure of the fund so far, or names of beneficiaries. The PMNRF provides annual donation and expenditure information without any detailed break-up. The PM CARES Fund’s trust deed is not available for public scrutiny.
6. The decision to allow uncapped corporate donations to the fund to count as CSR expenditure — a facility not provided to PMNRF or the CM’s Relief Funds — goes against previous guidelines stating that CSR should not be used to fund government schemes.
A government panel had previously advised against allowing CSR contributions to the PMNRF on the grounds that the double benefit of tax exemption would be a “regressive incentive”.
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