Open Letter To The Prime Minister On The PM-CARES Fund
The PM-CARES fund created for the benefit of people affected by the COVID pandemic. Both the purpose for which it has been created as well as the way it has been administered have left a number of questions unanswered.
16 January 2021
Dear Prime Minister,
We are a group of former civil servants of the All India and Central Services who have worked for decades with the Central and State Governments. As a group, we have no affiliation with any political party but are committed to the Constitution of India.
We have been keenly following the ongoing debate about the “Citizen Assistance and Relief in Emergency Situations”, or “PM-CARES” – a fund created for the benefit of people affected by the COVID pandemic. Both the purpose for which it has been created as well as the way it has been administered have left a number of questions unanswered.
The speed with which the fund was set up was breath-taking. It was registered on 27 March 2020, within three days of the first nationwide lockdown. As per information available on the website of the fund, in less than a week, the fund had received ₹ 3076.62 crores. The actual amount received to date is yet to be disclosed.
The immediate cause of this letter is the refusal of the Government of India on 24 December 2020, to divulge details under the Right to Information (RTI) Act on the grounds that the PM Cares Fund is not a Public Authority under the ambit of Section 2(h) of the RTI Act, 2005. If it is not a public authority, how have the Prime Minister, Home Minister, Defence Minister and Finance Minister, as members of the government, lent their designations and official positions to it? Why are they Trustees in their official capacity and not as private citizens?
If PM-CARES is a private Trust, should donations to it be eligible as Corporate Social Responsibility (CSR) expenditure? Schedule VII (ix) under Section 135 of the Companies Act allows CSR exemptions for only certain types of funds established by Government including for socio-economic and relief work. On 28 March 2020, the Ministry of Corporate Affairs issued a circular stating “Item no. (viii) of Schedule VII of the Companies Act, 2013, which enumerates activities that may be undertaken by companies in discharge of their CSR obligations, inter alia provides that contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure. The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation. Accordingly, it is clarified that any contribution made to the PM-CARES Fund shall qualify as CSR expenditure under the Companies Act 2013.” Clearly, contributions to the fund could not have been legitimate CSR expenditure had the fund not been “set up by the Central Government”.
The question that then arises is whether the circular of 28 March 2020 is legally deficient, more particularly when the Ministry of Corporate Affairs issues a gazette notification on 26 May, 2020 to include this fund in Schedule VII under Section 135 of the Companies Act as eligible to receive CSR funds with retrospective effect from 28 March 2020. The new entry of PM-CARES to the list at item (viii) in Schedule VII comes after the entry “Prime Minister’s National Relief Fund (PMNRF)”. Why was the new fund necessary when the nation already had a fund for national relief?
The Trust deed of the PM-CARES fund states in point 5.3 that “this 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.” Then how is it that such large deposits have come from the public sector? If the Fund is not a public authority, why are our Embassies seeking funds from abroad? The MEA’s press release of 30 March, 2020 states that in a video conference you had with our Ambassadors on that day, you had explicitly “advised Heads of Mission to suitably publicize the newly-established PM-CARES Fund to mobilize donations from abroad.” Most certainly, the fact that you and other senior Ministers of Government handling sensitive portfolios are Trustees would ensure a substantial flow of funds. Also, contributions are being solicited by government officials from private citizens. The then Secretary, Ministry of Corporate Affairs, appealed to the Institute of Chartered Accountants (ICAI) to donate to the Fund and the ICAI complied. Can the Secretary seek donations from an organisation he has official dealings with?
Though the PM-CARES fund is not being accepted as a public authority, under the RTI Act, in 2019, the Supreme Court held that trusts, societies and non-government organisations, both private and public, which enjoy “substantial government financing”, should be treated as “public authorities” under the RTI Act. The substantial government funding in the case of PM-CARES is evident from the wages and other moneys received directly or indirectly from the Consolidated Fund. As per a Times of India report on 19 May, 2020, out of over Rs 10,600 crores in the fund, over ₹ 3200 crores was from public companies and nearly ₹ 1200 crores from public sector employees – apparently from out of salaries and wages of members of the defence forces, and other government and semi-government organisations.
There is a clear absence of transparency in every aspect of PM-CARES. Neither details of donors and amounts received nor details of expenditures incurred are in the public domain. This opacity is disturbing as the State governments handling the COVID-19 challenge were, and continue to be, sorely in need of financial assistance.
Public memory is short, Mr. Prime Minister. The young people of our country may not have even heard of A.R. Antulay, who in 1980, as the Chief Minister of Maharashtra, created a number of funds, including one
called the Indira Gandhi Pratibha Pratishthan. In that case, the fund was apparently a private fund but couched as if it were the Government’s. Ultimately, Antulay was charged by BJP functionaries in court and had to resign.
It is necessary that, for reasons of probity and adherence to standards of public accountability, the financial details of receipts and expenditures be made available in order to avoid doubts of wrongdoing. In the well-known 1975 Raj Narain case, Justice Mathew observed that “the people of this country have a right to know every public act, everything that is done in a public way by their public functionaries.” It is essential that the position and stature of the Prime Minister is kept intact by ensuring total transparency in all dealings the Prime Minister is associated with.