By: Ayushi Upadhyay* |
Disasters demand heightened expenditure which is financially onerous for a developing country, since it is challenging to mobilise funds in a short period of time. Facing the current COVID-19 disaster, the Indian Prime Minister Modi announced the setting-up of the “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund” or the “PM-CARES Fund”. The Prime Minister chairs this in his official capacity. The Ministers of Defence, Home-Affairs and Finance are ex-officio trustees of PM-CARES Fund. This fund does not receive budgetary support but receives voluntary donations from individuals, organisations and foreign donors.
The Government justified this set-up by stating that a donation-based fund subverts legislative delay and fast-tracks finance mobilisation as situations like the current pandemic demand expeditious actions and any expenditure from consolidated fund requires passage by parliament. Therefore, by creating this donation-based fund, the legislative delay has been looked after. It was also stated that the PMO had been receiving requests to donate to support the government, so this separate fund will assure the people that their contributions are used solely for fighting COVID-19. Moreover, this fund has enabled micro-donations, thus, allowing people to contribute even the smallest of denominations-as-low-as Rs 10. The aim is to channelize all the resources for fighting against this pandemic.
The Opposition members questioned the need for this fund by stating it as a mere duplication of the “Prime Minister National Relief Fund” or the “PMNRF", but government officials have claimed that PM-CARES is more democratic and unlike PMNRF, the Prime Minister is not the sole “judge, jury and executioner” of this fund, and his powers have been diluted by delegating powers to other ministers on the board. Also, some contend that the PMNRF had become an investment vehicle rather than being a war-ready chest for situations like the one presently faced by India. The officials claim that with a more democratic process in place, the PM-CARES Fund will become a war-chest that can be relied upon in this hour of need.
Need of PM-CARES fund, when PMNRF was already in the place
Though PM-CARES appears to be novel, it has been largely criticised on various grounds, and is deemed as problematic. Firstly, no concrete reason has been provided for its creation when the PMNRF was already present; a fund with similar objectives that provides relief during natural calamities and other accidents. Moreover, since the Home Ministry had declared Coronavirus outbreak as a “notified disaster”, the PMNRF’s fund could also have been disbursed for relief, especially when it had an unspent balance of Rs.3800 crores. The PM-CARES diverts the funds that would have been donated to State Government Relief funds that bear the major burden of implementation of relief operations. Channelizing all the contributions towards the centre does not seem like a wise move.
NGOs would struggle for their funding because
Secondly, its creation also affects the collection of NGOs, as a lot of funding for COVID-19 would get centralised due to the setting up of PM-CARES Fund and hence, curtailing the funds to the NGOs. This will lead to the death of the localised solutions that form the base of grassroot-humanitarian efforts in such tough times, as many of the innovative ideas and solutions come from the civil society and such societies would struggle to operate in absence of funding. An AIIMS doctor stated that a promised donation for protective health gear was diverted to PM-CARES. Hence, the inevitable problem has already surfaced.
The distorted notion of contribution
Thirdly, PM-CARES comes with the distorted notion of contribution. The cabinet secretary gave impetus to this paradox through a letter to secretaries of all departments, asking to issue an appeal to officials of their departments to make voluntary contributions which will be sent to PM-CARES Fund. Now, the question which arises is, why mustn’t the officials have the right to donate to any fund of their choice? The revenue department’s notification was even which appealed to the officials to donate their one-day-salary to PM-CARES Fund, was even more problematic. While it appealed for voluntary donations, it also directed the employees to intimate a designated official in case of any objection to making the donation. How can an appeal transform into a mandate with stated refusal designed in order to leave a trail? The decision of whether to affirmatively respond to the appeal or not should rest on the employee him/herself. This appeal seems to coerce employees to agree without any demur while ignoring the basic principle of donation i.e. it should be voluntary and can be made to any fund/organisation.
Lack of transparency
The fourth grey area is the issue arising out of the lack of transparency. The PM-CARES webpage is opaque about the collection of money, expenditure, names of donors and beneficiaries. It is unclear, whether the fund falls under the ambit of the RTI. One of the RTI queries to the PMO in this regard was refused citing- “indiscriminate and impractical demands under RTI Act for disclosure of sundry information would be counterproductive”, while others have not been answered despite the expiration of statutory-period.
Also, a trust, as a legal entity is used by ‘private actors’ to benefit the public and a trustee is bound to do this in accordance with the trust deed. However, the trust deed of PM-CARES is unavailable for public scrutiny. Public scrutiny would ensure that the amount collected under the PM-CARES Fund, is used for its stated purpose without misappropriation by any official or any other intermediary.
If the government’s contention (for the lack of transparency) is that PM-CARES is in the nature of private trust, then this can be rejected. Since the funds are invited through public-notice, trust is established by public officials and is subject to ex officio control of the public office, it gains a public character. The nomenclature- “Prime Minister’s” fund gives an unequivocal impression of it being a government creation. Additionally, the exemptions granted under fiscal laws and public expenses on advertisements to incentivise collection is indicative of a conflict of interest, if done for a ‘private trust’.
However, even if this contention is given way, then too, the private nature cannot justify the denial of information. Section 19 of Indian Trusts Act, provides that trustees need to furnish complete and accurate information of the amount and the state of trust property to the beneficiaries and since any ‘private trust’ headed by PM must be for the benefit of public, each citizen is a constructive beneficiary of PM-CARES and is entitled to the above information.
Doubt regarding as to the compliance of due procedure for the formation of the PM-CARES Fund
Fifthly, doubts have been raised as to whether the due process has been followed for forming this trust. A trust deed with stated objects and rules for the operation of the trust needs to be registered as per the Registration Act, 1908 and Income Tax Act, 1961. Moreover, if a public charitable trust’s income is exempted from tax, then it must have been registered under section 12A of the Income Tax Act. Section 12AA entails the procedure of registration under which documents like trust deed, registration certificate etc are needed. Similarly, if the donors of an organisation want to claim income tax exemption, then the organisation should have obtained certification under Section 80G of the Income Tax Act which also provides a due process. Moreover, since PM-CARES is open to foreign donors, it must have an FCRA Registration under the Foreign Contribution Regulation Act, for which the copies of relevant audited statement of accounts for the past three years need to be submitted. It would have been worthwhile to find whether this condition was relaxed for PM-CARES and if the PM-CARES fund had complied with the due process; failing which, it was susceptible to a legal challenge, that’s why, an RTI query was filed with the PMO, asking for documents related to PM-CARES, including the trust deed, tax exemption certificate and other bylaws governing the trust. However, after thirty days, the application was rejected on the grounds that- PM-CARES Fund is not a public authority under Section 2(h) of the RTI Act, 2005.
Further, the creation of this fund seems incoherent with articles 266 and 283 of the Constitution. Article 266(2), provides that all money other than consolidated and contingency fund, received by or on behalf of the government is payable to public account. Article 283(1) states that all matters i.e. payment and withdrawal related to the public account shall be regulated by law made by parliament or the rules made by the President. Hence, to comply with constitutional provisions, parliamentary oversight or set of rules formulated by the President is necessary. The petitioner in Manohar Lal Sharma v. Narendra Modi sought to rescind PM-CARES on the ground of unconstitutionality as it has not been enacted under article 266 or 267 or passed by Parliament or approved by the President. However, the PIL was dismissed as a “misconceived petition”.
Concerns relating to exemptions granted under this fund
The sixth concern relates to exemptions granted when donating to PM-CARES. The decision that corporate donations to this fund will count as CSR-expenditure goes against the guideline that CSR shouldn’t be used to fund government-schemes as it will be a “regressive incentive” which provides the double benefit of tax-exemption. The contributions made to the State Relief Funds will not qualify to be admissible as CSR Expenditure because they are not included in Schedule 7 of the Companies Act. However, ideally, the Centre should have amended this schedule, so as to permit the states’ fund to access these donations because otherwise PM-CARES will corner the major contributions and deprive the states, who are in the frontline of the fight. Such a scenario is against the spirit of cooperative-federalism.
Also, the government passed an ordinance, which provides for 80G benefits to the people, who would donate to PM-CARES Fund. This step has been taken to make this fund attractive to the high-value donors who desire for tax-breaks while doing charity. If looked at from critical perspective, it is quite apparent that this ordinance has paved way for the people to avoid paying taxes, which means that the money which was to go to the government, would now go to a trust, which lacks transparency.
In the end, it is evident that the government has not given any compelling reason for forming PM-CARES and doubts regarding its legal validity still linger. The Opposition has alleged that the self-aggrandizing name-PM-CARES mocks the national tragedy by using it to enhance the cult of personality and has been cleverly chosen to reinforce political message that-the PM cares when it may have been “INDIA-CARES”.
Since the people of India have reposed faith and confidence in the Prime Minister by donating and making contributions to the newly formed PM-CARES Fund, it becomes the duty of our Prime Minister to ensure the adequate use of the amount collected so as to deal with the problems emanating out of this pandemic, in an effective manner. Institution of better transparency frameworks will also help in ensuring the optimum utilization of the donations made. It is good to hope that the fund doesn’t turn out to be a publicity stunt but actually ‘cares’ for India.
* The author is a student at National Law University, Delhi.
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