PM Cares Fund - Objectives, Constitution, and Issues

PM CARES Fund is a public charitable trust set up in 2020 with the primary objective of dealing with any kind of emergency situation like posed by the COVID-19 pandemic.

The PM CARES was formed on 28 March 2020 with Prime Minister Narendra Modi as its chairperson and senior cabinet members as trustees.

Opposition parties are of the view that the new fund lacks transparency. They have questioned why it was created when the Prime Minister’s National Relief Fund, which was set up in 1948, has a balance of 3800 crore rupees ($500m).

Table of Contents

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.

What is PM-CARES Fund?

Stands for Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund.
Launched by Prime Minister Narendra Modi in the aftermath of coronavirus outbreak.
It is a dedicated national fund for dealing with any kind of emergency or distress situation.
It is a public charitable trust.

Objectives of PM-CARES Fund

To provide relief or assistance of any kind relating to a public health emergency or any other kind of emergency, including the creation or up-gradation of healthcare or pharmaceutical facilities, other necessary infrastructure, funding relevant research, or any other type of support.
To render financial assistance, provide grants and other steps as determined 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.
Minister of Defence, Minister of Home Affairs, and Minister of Finance are ex-officio Trustees of the Fund.
The 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.

What you should know about 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.

Prime Ministers’ National Relief Fund (PMNRF)

Prime Minister’s National Relief Fund (PMNRF) was established in the year 1948 to assist displaced people from Pakistan after the partition of India.
Now the fund is used primarily to provide immediate relief to families of those killed in natural calamities, to the victims of the major accidents and riots.
Assistance from PMNRF is also given for medical treatment like heart surgeries, kidney transplantation, cancer treatment, and acid attack, etc.
The fund consists entirely of public contributions and does not get any budgetary support.
PMNRF has not been constituted by the Parliament but recognized as a Trust under the Income Tax Act
Contributions towards PMNRF are notified for 100% deduction from taxable income under section 80(G) of the Income Tax Act, 1961.
Prime Minister is the Chairman of PMNRF and is assisted by Officers/ Staff on an honorary basis.

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.