PM Cares Fund

Why in news?

IN AN open letter to Prime Minister Narendra Modi, a group of 100 retired civil servants have flagged a lack of transparency in the PM Cares Fund, asking for the financial details of receipts and expenditures to be made public.

About:

Keeping in mind the need for having a dedicated fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic, and to provide relief to the affected, a public charitable trust under the name of ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’ has been set up. PM CARES Fund has been registered as a Public Charitable Trust. The trust deed of PM CARES Fund has been registered under the Registration Act, 1908 at New Delhi on 27th March, 2020.

Objectives :

• To undertake and support relief or assistance of any kind relating to a public health emergency or any other kind of emergency, calamity or distress, either man-made or natural, including the creation or upgradation of healthcare or pharmaceutical facilities, other necessary infrastructure, funding relevant research or any other type of support.
• To render financial assistance, provide grants of payments of money or take such other steps as may be deemed necessary by the Board of Trustees to the affected population.
• To undertake any other activity, which is not inconsistent with the above Objects.

Constitution of the Trust :

• Prime Minister is the ex-officio Chairman of the PM CARES Fund and Minister of Defence, Minister of Home Affairs and Minister of Finance, Government of India are ex-officio Trustees of the Fund.
• The Chairperson of the Board of Trustees (Prime Minister) shall have the power to nominate three trustees to the Board of Trustees who shall be eminent persons in the field of research, health, science, social work, law, public administration and philanthropy.
• Any person appointed a Trustee shall act in a pro bono capacity.

Other details :

• The fund consists entirely of voluntary contributions from individuals/organizations and does not get any budgetary support. The fund will be utilised in meeting the objectives as stated above.
• Donations to PM CARES Fund would qualify for 80G benefits for 100% exemption under the Income Tax Act, 1961. Donations to PM CARES Fund will also qualify to be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013
• PM CARES Fund has also got exemption under the FCRA and a separate account for receiving foreign donations has been opened. This enables PM CARES Fund to accept donations and contributions from individuals and organizations based in foreign countries. This is consistent with respect to Prime Minister’s National Relief Fund (PMNRF). PMNRF has also received foreign contributions as a public trust since 2011.
• During 2019-20 (from 27^th to 31^st March, 2020), an amount of Rs. 3076.62 Crore has been collected under PM CARES Fund

What is a trust?

Trust as defined in section 3 of the Indian Trust Act, 1882 means the transfer of property by one person (the settlor) to another (the trustee) who manages that property for the benefit of someone else (the beneficiary).

Trusts in India

• There are two types of trusts in India: private trusts and public trusts.
• Private trusts are governed by the Indian trusts Act, 1882
• Public trusts which include charitable and religious trusts are governed by statutes like The Charitable and Religious Trust Act, 1920, The Religious Endowments Act, 1863, The Charitable Endowments Act, 1890, The Bombay Public Trust Act, 1950.
• ‘Charitable purpose’ as defined under Section 2(15) of the Income Tax Act includes relief to the poor in the form of education, medical aid, or through any other object of public utility.

Key points highlights of PM Cares Fund

• The fund consists entirely of voluntary contributions from individuals/organizations.
• Any person appointed a Trustee shall act in a pro bono capacity.
• It does not get any budgetary support.
• PM CARES Fund will not be audited by the Comptroller and Auditor General (CAG) of India. PM CARES Fund will be audited by independent auditors who will be appointed by the trustees
• Donations to the fund would qualify for 80G benefits for 100% exemption under the Income Tax Act, 1961.
• Donations will also be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013.
• A separate account for receiving foreign donations has been opened and the fund has also got exemption under the FCRA (Foreign Contribution and Regulation Act), 1976.
• PM cares fund can accept donations and contributions from individuals and organizations based in foreign countries. PM CARES Fund has received an exemption from the operation of all provisions of the Foreign Contribution (Regulation) Act, 2010. This is similar to the Prime Minister’s National Relief Fund (PMNRF). PMNRF has also received foreign contributions as a public trust since 2011.

PM Cares Fund vs PM National Relief Fund vs CM State Relief Fund vs SDMA

• Unlike PM National Relief Fund, PM CARES, CM’s Relief Funds and SDMAs are not dependent on donations.
• PM CARES and State Disaster Management Authorities (SDMAs) are governed by central laws, while CM’s Relief Funds are governed by state laws.
• Donations to PM CARES Fund and State Disaster Management Authorities (SDMAs) qualify as CSR, but not to CM’s Relief Fund.
• SDMAs are funded through a joint corpus of the Centre and sates. Centre’s contribution to the corpus is 75%.

Issues with PM-CARES Fund

• Several opposition leaders and other prominent people have questioned the need for establishing a new fund when PMNRF already exists.
• Some have questioned the opacity surrounding the PM-CARES fund as the trust deed has not been made public. It is not known whether all members of the trust have voting rights or not.
• Critics have also pointed out that the trustees of PM-CARES have a fiduciary duty towards the trust and the beneficiaries. The acronym also sends a political message and hence it is alleged that the character of the fund is incompatible with a public charitable trust.
• The government’s decision to accept foreign donations for PM CARES was also critically viewed as the government in the past had refused foreign donations to deal with the domestic crisis.
• Some critics also question whether due process was followed in registering the trust, obtaining exceptions under the Income Tax Act, accepting foreign contributions under FCRA, etc.
• Critics also flag the lack of transparency of the fund as the name of contributors and beneficiaries are not disclosed in this fund, and audits are held by those people who are appointed by trustees of board.

Suggestions regarding PM CARES Fund

• To bring the fund within the ambit of the Right to Information Act and to make suo-moto disclosures regarding:
  • The trust deed of PM CARES fund and all the documents that relate to the setting up of the fund as a public charitable trust.
  • Disclose the details of the donors and the amounts contributed from time to time.
  • Disclose the norms laid down for utilizing the fund and the institutional arrangement for complying with the norms.
  • Disclose the details of the amounts utilized from time to time and the purposes for which they are utilized
• Further, to improve transparency and accountability, the operation of the fund has to be audited by Comptroller & Auditor General (CAG) and make public disclosure of reports.
• Further there is a need for parliamentary oversight, as contributions from PSUs and MPLAD funds can go into the fund. MPLAD funds come from the Consolidated Fund of India and are governed by rules regarding its spending.
• As an immediate response to COVID-19, the fund should be utilized for procuring Personal Protection Equipment (PPE) for medical and para-medical personnel, sanitation workers and other front-line workers, providing health infrastructure including ventilators, establishing testing facilities and isolation wards.
• Dedicating the PM CARES fund for the COVID-19 pandemic and similar emergencies while continuing PMNRF for all types of natural disasters.

Conclusion

People from all walks of life have contributed generously to the PM-CARES fund as it accepts micro-donations as low as Rs.10.

It is important to do justice to the faith of the citizens by making the administration of the fund accountable through prompt disclosures and periodical auditing.