PM CARES: Is It Public Fund or Private Fund?

This unaccountability towards people for whom it is constituted comes at a time when the Modi govt has been tightening its grip around NGOs and their fundings.

Its almost the end of 2020, and if there is one thing we all Indians should care about among other things is What exactly is happening to PM CARES? How much amount is collected in the funds? How much money has been allocated and for what purpose? Who all have donated to it and how much? And the big question mark itself, Whether it is a public entity under the government of India or a private entity? These questions are important since the Government has refused to answer it under the Right to Information Act saying that PM CARES isn’t a public authority. This unaccountability towards people for whom it is constituted comes at a time when the Modi govt has been tightening its grip around NGOs and their fundings.

Take for example Amnesty international. Recently, the ED put a freeze on its all bank accounts prompting the human right organization to shut its shop in India. The NGO announced shutting of its offices in India and letting go of its staff, nearly 150 members, in Bengaluru and Delhi. The Govt is probing Amnesty under FEMA and FCRA Violations. It is only a few days ago that Court granted the NGO to withdraw some amount from its account.

So while on one hand, the Modi govt has been cracking down on NGOs based for Funding violations, on the other hand, it refuses to provide any information regarding the fund constituted by itself.

Today in this video, we will talk about PM CARES and all the confusion surrounding it in Detail and Also try and understand why it matters to have more transparency in funds like PM CARES.

Let us begin with What the Govt says about PM CARES:

It was at the beginning of the lockdown that PM Modi had announced setting up of PM CARES. According to the PM CARES website, it is a Public Charitable trust. The website also mentions that it has been registered under the Registration Act, 1908 at New Delhi on 27th March 2020. 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. Donations to PM CARES Fund would qualify for 80G benefits for 100% exemption under the Income Tax Act, 1961.

Now Interestingly enough, On the very next day of its registration, the Ministry of Corporate Affairs issued an office memorandum qualifying PM-CARES as corporate social responsibility (CSR) initiative to receive corporate donations. The Companies Act defines eligibility for corporate donations as: “Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women.” Now, the problem was this new amendment of CSR extends only to PM CARES fund and not to CMs or State Relief Funds for COVID-19. But that problem aside. The corporates can make donations towards “Fund Set up by Central govt or the state govt” for the purpose listed above. Pay attention to words “Fund Set up by Central govt or the state govt”. And now this donation the Modi govt as per the 28th March communication of Ministry of Corporate Affairs said will be considered as CSR if made to PM CARES.

PM CARES: What PMO Replied?

You might remember that after the setting up of PM CARES, several ministries, Armed Forces, PSUs and even govt run hospitals at the frontline of fighting covid-19 announced that they are pledging one day’s salary to the fund. Not only that, several individuals, private corporates have also made a donation to PM CARES. Now, several activists alerted by the composition of the PM CARES filed RTI. Since the fund is set up under the name of the office of PM, and he is the ex-officio Chairman, one such RTI was filed with PMO in the month of May.

Harsha Kandukuri, a student of the Azim Premji University, Bangalore filed an RTI on April 1 with PMO. He had sought copies of the trust deed and all government orders, circulars and notifications related to its creation and functioning.

Do you know what the PMO said in a reply? It said that the Fund is not a public authority under section 2 (h) of the Right to Information Act, 2005, and therefore it won’t be able to divulge information sought in the application. Many of you like me would have a question by now, how come PM CARES is not a public authority if it has the name of PM’s office and other ministers are trustees. So let’s understand the nuances.

As per the RTI Act, a public authority means any authority, body or institution of self-government established or constituted a)by or under the constitution; b) by any other law made by parliament; c) by any other law made by the state legislature and d) by a notification issued or order made by the appropriate government. It also includes “body owned, controlled or substantially financed; non-governmental organisation substantially financed directly or indirectly by funds provided by the appropriate government”. Apart from that CAG’s office had told NDTV that it wouldn’t audit PM-CARES Fund as it is “a charitable organisation”.

However, in the month of August, there was another RTI reply that shows contradiction. The file notings accessed by RTI activist Anjali Bharadwaj showed that the Ministry of Corporate Affairs (MCA) had declared that the fund was set up by the Central government on the day the fund was created. File notings accessed by RTI activists show that the Ministry of Corporate Affairs (MCA) had declared that the fund was set up by the Central government on the day the fund was created.

Let us simplify all the info again: On the day the fund was created, the Central Govt ministry declares it is Fund set up by Central govt. This would mean on the day it was created PM CARES was a public authority and answerable under RTI. The website says It is a Public Charitable Trust and the PMO says it is not a public authority.

Now after getting several questions surrounding the nature of PM CARES, in the month of May the govt amended the Companies Act itself. The retrospective amendment meant that the CSR activity would no longer be dependent on whether the fund has been set up by the Central Government or not. So corporates can make a donation to PM CARES and still get CSR benefit despite it not being clear whether PM CARES is set up by central govt or not.

Now let’s talk about the PM CARES Trust Deed

Two days ago the trust deed of PM CARES came out. It has also been shared on the PM CARES website. Point 5.3 of the Trust Deed says: “The trust is neither intended to be or is in fact owned, controlled or substantially financed by any government or any instrumentality of the government. There is no control of either the central government or any state governments, either direct or indirect, in the functioning of the trust in any manner whatsoever.” This clearly spells out that it is not a govt trust but a private one. So how come, people in public office are its trustees? Secondly, this deed was made on March 28. So the govt was clear that it would be a private trust. In that case until the amendment was made in May, how come PM CARES received Corporate Donations which also qualified as CSR?

Do we know which corporates donated to PM CARES and how much? No.

Okay! the deed further says- “The composition of the board of trustees consisting of holders of public office ex-officio is merely for administrative convenience and for smooth succession to the trusteeship and is neither intended to be nor in fact result into any governmental control in the functioning of the trust in any manner whatsoever,” the deed says. More questions from this para. Since PM, FM and Defense Minister are ex officio holding position on a private trust for smooth succession to trusteeship, who is going to be that trustee? To whom the govt is going to make responsible for such a large amount of money? Another question. PM CARES has been using national Emblem. How can a private trust use national emblem? secondly, even after succession will the trust continue to use it?

Since we are questioning who all paid to PM CARES and how much, the Private deed puts a blanket on that question too. Here is how… Read this para: “…the Trust shall fully respect and will not allow any invasion of the privacy of the contributor/s by divulging their names, addresses and/or other details and the details regarding their contributions to anyone except to the tax authorities.”

But that isn’t the scary part: Apart from lack of transparency in terms of donors, it also says it can invest the money wherever it wants! Moreover, if they incur losses for it, the trustees will not be held liable!

Why it matters to talk about PM CARES

The website of PM Cares discloses that there is more than 3000 crore rupees in the fund right now. An independent study conducted by journalists at IndiaSpend revealed that the fund could have nearly 10,000 Crores in the kitty. They arrived at the figure by calculating all the sum announced in PIB press release, and from media reports on private companies and individuals donating and/or pledging money to the fund. According to the report the PM CARES received At least Rs 5,369.6 crore of corporate social responsibility (CSR) funds, that is by corporates.

Now Imagine donating to someone who says I will use it for relief purpose and when you ask them baba what did you use my money for, what did you buy, where did you spend it? the person says who are you? why should I tell you? Whether your money is used for the purpose stated or not, how do you know?

The entire claim of PM CARES is that the trustees will act in good faith. The problem with PM CARES is that when it comes to donating, many donated to it thinking that they are donating to the Govt set up a fund and not to a private trust. The National Emblem used creates that image. But in reality, it is a private fund not answerable to the public and not liable to the public.

So there are clouds of obscurity on PM CARES.