Countries across the world are facing harsh economic conditions and several have entered into recession owing to the COVID-19 pandemic. India itself saw economic growth contract by 23.9% for the first quarter of 2020. In such circumstances, it becomes imperative for governments to ensure that they have adequate financial resources in order to keep economies afloat. In order to ensure availability of adequate resources, the Government of India recently announced the creation of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund.
The PM CARES Fund, notified on 28th March 2020 was created as a public charitable trust specifically to ensure that the government can provide relief in instances of health emergencies as well as during man-made or natural disasters. The Trust is headed by the Prime Minister and includes the ministers of Defence, Finance and Home Affairs as trustees. It is important to note that all positions are held ex-officio, that is, by virtue of the office. The Fund is entirely based on voluntary contributions from the individuals as well as corporations and is distinct from other Funds because it does not receive any annual budgetary contribution from the Union Government. Based on audit accounts, the Fund had received a total income of Rs. 3,076 crores between the 27th and the 31st of March 2020, that is, in 3 days of the Fund being notified.
The PM CARES Fund continues to face severe opposition owing to the nature of its trustees. Many have questioned the objective of the Trust given that the National Disaster Response Fund (NDRF), as required under the Disaster Management Act, 2005 was already in existence for a similar purpose. Recently, the objectives and the functioning of the Fund were also challenged before the Supreme Court of India.
In its submissions before the Court, the petitioners argued that the PM CARES Fund sought to divert funds from the NDRF and moreover, the Fund, disguised as a public charitable trust was opaque because it did not allow for an audit by the Comptroller and Auditor General of India (CAG). The Supreme Court, however, negated the arguments and stated that the two funds were distinct since the PM CARES Fund solely dealt with national health emergencies whereas the NDRF dealt with natural disasters. The Court also noted that the NDRF was a statutory fund as against the PM CARES Fund which was created as a public charitable trust – this distinction made a CAG audit voluntary.
However, doubts about the Trust remain. One such irregularity is the nature of the PM CARES Fund and whether such a Trust could function outside the scope of Parliamentary and judicial scrutiny?
The public charitable trust has the Prime Minister as its ex-officio chairman and seeks to provide relief during health emergencies – this makes it clear that the beneficiaries of the Trust are the public at large. As a result, if the public seek greater information about the assets and accounts in possession of the trust, as successive cases before the Courts have shown, such information should be made available. It is in larger public interest that the Fund should be transparent, especially for the beneficiaries of the Fund.
The Constitution of India provides for a Consolidated Fund of India for routine expenditures of the State, a Contingency Fund of India for meeting unforeseen expenditure and a Public Account wherein all other public money received by the Government is credited. The Constitution does not provide for any other fund wherein public money may be received. It must be emphasised that these funds can be scrutinised by Parliament under Article 283.
Interestingly, Article 266(2) read with Article 284(a) states that all money deposited by the public with any officer connected to the affairs of the Union or the State government must necessarily be paid into the Public Account– by extension, all money received by the PM CARES Fund, as it is received on advertisement by government officials managing the fund, must necessarily be transferred to the Public Account. Since the scope of the Public Account is wide enough, a separate PM CARES Fund with ministers as trustees is not urgently required.
The urgency to create a trust exempt from all forms of scrutiny only increases speculation. The financial benefits guaranteed to depositors through income tax exemptions under Section 80G of the Income Tax Act, 1961 and further allowing corporate donations towards the Fund to be treated as corporate social responsibility (CSR) expenditure hints at the existence of vested interests. It must be noted that donations to Chief Ministers Relief Funds do not grant similar CSR benefits. This scheme favouring a central fund has resulted in an increase in donations towards the PM CARES Fund as against the State relief funds. This impacts the States as they continue to fight a pandemic with limited resources.
The Supreme Court’s insistence that the CAG need not audit the PM CARES Fund is contrary to the need for transparency, especially during a global health crisis.
Despite the issues stated above and the clear availability of alternatives, there are several legislations that the Trust, in its current form, appears to violate. The Fund is currently advertised with references to the Prime Minister of India and also includes the image of the Prime Minister – if it is a Trust that is distinct from government, then such advertisement violates the Emblems and Names (Prevention of Improper Use) Act, 1950. The Act allows such representation only with the permission of the Central Government. The Schedule to the Act also states that all names which imply patronage of the Government of India cannot be used. Further, the use of the national emblem of India, the Ashoka Pillar, as a part of the logo of the Fund violates the State Emblem of India (Prohibition of Improper Use) Act, 2005.
Similarly, the website of the Fund has the official domain used by all other government webpages, that is, “gov.in”. As such a domain address can only be used by government webpages, its use by the Fund hints at it being a government Fund.
Moreover, under the Right to Information Act, 2005, (RTI Act) multiple inquiries asking for disclosure of assets and contributions have been rejected by the government. The government argues that the Fund, being a Trust, is not a public authority and hence, is outside the scope of the legislation. The government furthered similar arguments before the Supreme Court of India to reject audits by the CAG.
Under the RTI Act, citizens can only ask for information from public authorities. A public authority is defined as any authority, body or institution of self-government created under the Constitution, by Parliament or by a notification by the appropriate government. Owing to information that has recently become available to the public, it is now known that the government contradicted itself before the Supreme Court of India. While the government announced that corporate donations to the PM CARES Fund would be considered as CSR contributions, a recent government note shows that despite an assurance that donations to the PM CARES Fund would be accepted as CSR donations, there was an insistence within the government to formalise this assurance in the form of an amendment to Schedule VII of the Companies Act, 2013 through a notification from the Ministry of Corporate Affairs.
Schedule VII of the Companies Act, 2013, contains a list of areas wherein contributions would be considered as CSR activities includes an enabling provision. This provision states that “contribution to …. any other fund set up by the central government” would be considered as fulfilment of CSR requirements. With the amendment now including the PM CARES Fund into this provision, there is no doubt that the Fund is created by the central government. Subsequently, as it is now clear that the PM CARES Fund is directly associated with the Government of India, it comes within the scope of a public authority under the Right to Information Act, 2005. As a result, the Fund must provide all information requested.
Based on the abovementioned challenges faced by the PM CARES Fund, it is clear that the public charitable trust is not only under government control but also receives patronage of the central government. The ability of the government to direct salaries of employees of all Public Sector Undertakings to the Fund also leads to similar conclusions.
In the midst of a public health crisis, the primary responsibility of the government must be to alleviate the concerns of the people. For this purpose, the government must ensure that it has adequate resources to meet public expectations. While accepting the Supreme Court of India’s opinion that financial planning must remain the domain of the central government, this observation must be qualified by the overarching need for transparency.
The Union government has not sufficiently allayed public apprehensions concerning the PM CARES Fund. Moreover, it continues to reprimand any challenge to the Fund. The sole aim should be to ensure that donations received in the accounts created by the government are spent for the benefit of the intended beneficiary, that is, the public.
 Article 266(1), The Constitution of India, 1950
 Article 267(1), The Constitution of India, 1950
 Article 266(2), The Constitution of India, 1950
 Section 2(h), The Right to Information Act, 2005
 Schedule VII (viii), The Companies Act, 2013