A black hole called PM Cares fund

Narendra Modi has launched a new fund to collect donations for citizens suffering because of the coronavirus pandemic. But it’s a murky venture.

WrittenBy:Meghnad S
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What came first? The fund name or the acronym?This is the classic “Prime Minister’s Citizen Assistance and Relief in Emergency Situations” and “PM Cares” question. But apart from this, there are many questions being asked about this new initiative by Prime Minister Narendra Modi.

Here’s what it’s all about:


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It is a good initiative, there is no doubt about that. But the primary question being asked is whether there was even a need to start a separate fund at this time. In case you don’t know, there is already a similar fund called the Prime Minister National Relief Fund, or PMNRF.

See for yourself.

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“The resources of the PMNRF are now utilized primarily to render immediate relief to families of those killed in natural calamities like floods, cyclones and earthquakes, etc and to the victims of the major accidents and riots. Assistance from PMNRF is also rendered, to partially defray the expenses for medical treatment like heart surgeries, kidney transplantation, cancer treatment and acid attack, etc.”

The operative part here is “natural calamities” and the two “etc”. Is the coronavirus pandemic a natural calamity? The home ministry says it’s. On March 14, in an unprecedented move, the ministry declared the coronavirus outbreak in the country a “notified disaster”, enabling state governments to use more money from the State Disaster Relief Fund to help out their suffering citizens. Essentially, now the funds from PMNRF can also be disbursed to provide relief.

The great thing about the PMNRF is that you can find out how much money came into it and how much went out, where it was spent and for what purpose. We know, for one, that as of December 2019, there was an amount of Rs 3800.44 crore in the fund. It is there on the website for the whole wide world to see.

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So, what was the need to create a separate fund to deal with this crisis when the government could have easily used the existing (transparent) system for the same purpose?

A few features of the PM Cares fund are being bandied about in response. One, those who donate to it will get tax deductions under Section 80G of the Income Tax Act. Two, foreign contributions are accepted.

But the PMNRF also has both these features, tax benefits and foreign contributions. Which brings us back to the original question: why is a separate fund needed for coronavirus relief?

There is one more aspect that is raising red flags about the new fund. An ordinance was passed on March 31 which gives 80G benefits to people donating to this fund. So, some legislative effort was required to make the new fund attractive to high-value donors who also want tax breaks while doing charity.

According to this ordinance, the date for claiming tax deductions under Section 80G has been extended up to June 30. The donation made up until June 30, 2020 “shall also be eligible for deduction from income of FY 2019-20.”

This means people can claim deductions in the income tax returns they will file for the last financial year in case they donate before June 30. If you look at it in a critical way, this is a way for people to avoid paying tax – money that goes to the government – by giving money to a trust. Mind you, this fund is a public trust which can accept voluntary donations from the citizens with the prime minister as chairman and ministers of finance and defence as members.

There are reports of government employees and army personnel giving up their salaries to donate to PM Cares, public companies are giving money too and, of course, there are private donors such as Gautam Adani, Mukesh Ambani, Akshay Kumar. There are multiple estimates of how much the fund has collected so far, but there’s no official word on it yet.

Again, all of this could have been done using the PMNRF fund, but it wasn’t. And that is what is raising some doubts in my mind about the intention behind this fund. What would allay these doubts is a website like the one for PMNRF that has details of their activities, income and expenditure. It remains to be seen if this happens or not. In the meantime, a whole lot of money is going into a non-transparent fund.

The coronavirus situation in India is worsening and everything that can be done to tackle it needs to be done. As of 5.30 pm on April 2, at least 1,965 people had tested positive for coronavirus in the country, with 50 dying of it, according to the health ministry.

Amidst this, if you raise questions about this fund, it might be construed as questioning the good intentions of the government and unnecessarily criticizing it for trying to help those who are suffering. But it’s important to understand that these questions are being raised for precisely that reason: to ensure that the money being collected helps the people it is supposed to.

The PMNRF has that track record of being effective and transparent when it comes to providing relief to victims of calamities. Even under Modi, the PMNRF has been effectively utilised on several occasions. So, again, why create a new fund then?

The only explanation I can think of is that it’s just a promotional exercise. Since the PMNRF has been around for decades, it’s old news and might not be as attractive for donors as a new fund. PM Cares being created now with the sole purpose of providing relief to those in need, it can be argued, shows urgency on the government’s part, shows the rich and powerful are doing their bit, shows that the state machinery is working together to help. Perception-wise, it’s a clever move and it did get Modi marketing wins. It also raised a lot of money to alleviate the suffering of fellow citizens.

But history teaches us that often in the name of good intentions, scams are run. Let’s hope the PM Cares fund is not an attempt to pull a fast one on the citizens and ends up being an effective and transparent relief trust like the PMNRF.

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