PM-Cares Fund Vs. PMNRF- The Constitutional Debate

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The debates have been doing much in round as to the Constitutionality and formation of PM Cares fund and the need of its requirement when PM National Relief Fund (PMNRF) which was created in 1948 by the then PM Jawaharlal Nehru is already in place. However both the funds are targeted to mitigate the consequences of untimely disasters.

The PMNRF was established initially for the purpose of providing assistance to the displaced and refugees from Pakistan post-partition. The proceeds of PMNRF are now utilized for multiple purposes like rendering immediate relief to the victims of natural calamities, riots, acid attacks and also to cover up expenses for medical treatment of cancer patients, heart surgeries, kidney transplantations etc. for the families in dire need. It should be noted that PMNRF doesn’t have the approval of Parliament and thus does not have any budgetary support, solely consisting of public contributions only. Much to everyone’s surprise was the managing committee of the PMNRF, which had explicitly included the President of the India National Congress Party. The following people were included in the managing committee of the PMNRF.

  • The Prime Minister
  • The President of Indian National Congress Party
  • The Deputy Prime Minister
  • The Finance Minister
  • A Representation of Tata Trustees
  • A Representative of FICCI

In 1985, Rajiv Gandhi, being the Prime Minister, the managing committee of the fund entrusted the entire management to the Prime Minister who was conferred with sole discretion to appoint a “secretary” on his behalf, upon whom the authority to operate the bank accounts was also delegated. This gave unchecked power to the Prime Minister with zero accountability. The PMNRF was also under scanner since over the years it has been audited by third party auditors and not Comptroller and Auditor General of India (CAG).

On March 28, 2020, the Centre set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM Cares) Fund with the primary objective of of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic. The 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. Also eminent persons from the fields of science, health, law, public work etc. can be nominated. The fund has been set up as a Public Charitable Trust. 

The difference seen is that under PMNRF, the criteria for disbursement of money and selection of beneficiaries was purely at the discretion of the Prime Minister as per PM’s direction whereas under PM-Cares Fund, that power is also delegated to three other ministers. Therefore, unlike PMNRF, in PM-Cares Fund, the PM will not be the “Sole deciding” factor. There is also a provision to set up an advisory board under the PM-Cares fund, unlike PMNRF of not more than 10 persons from among the healthcare practitioners, academicians, lawyers and economists.

It is pertinent to note that there is no political party representation in PM-Cares fund. People will be appointed based on their stature and portfolios. The PM-Cares fund also assures people that the money they contribute will be used solely for fighting Coronavirus. The donations to PMNRF will continue as usual. But that money is used for other purposes as well. 

As regards the uncertainty about the auditing of the PM Cares fund, it has been drawing criticism from several corners and even petition was filled in the Supreme Court in Manohar Lal Sharma v Narendra Damodardas Modi & Ors (2020) challenging the legality and the functioning of the PM Cares Fund, but it was dismissed by the Hon’ble Court terming it as “misconceived” and “politically motivated”. The bench did not agree to the contention that the fund has been created without following the schemes enumerated under Article 266 and 267 (which deal with Contingency and the Consolidated funds of India) of the Constitution.

The PM CARES Fund also tries to differentiate itself from PMNRF by enabling micro-donations, as a result of which a large number of people will be able to contribute with smallest of denominations. One can donate as low as Rs. 10 in the PM-Cares Fund, while the minimum one can donate in PM National Relief Fund is Rs 100. Also, Donations to PM-Cares Fund would qualify for 80G benefits for 100% exemption under the Income Tax Act, 1961 and contributions by corporates will be considered eligible expenditure under the Corporate Social Responsibility (CSR) obligations. Further, any expenditure out of consolidated fund of India needs to be passed by the Parliament, but this is not so in case of donation based fund. Foreign Contributions to the fund are also allowed. 

However, Senior Congress Leader Shashi Tharoor have been questioning the government’s move constantly and said that instead of creating a separate public charitable trust whose rules and expenditure are totally opaque, the prime minister should have renamed the PM National Relief Fund and especially when Rs. 3,800 crore was lying unused in the PMNRF. 

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