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GS Paper: Transparency and accountability (institutional and other measures)

  • Activists raise alarm over PM CARES denial of access to audit statements

    Why in the News

    The Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund has not published audited financial statements for the last three financial years. The government maintains that the trust is not a “public authority” under the Right to Information (RTI) Act, 2005 and is therefore not bound by its disclosure requirements. Activists argue that the fund has all the characteristics of a public body. They point out that the Prime Minister is its Chairperson, Union Ministers serve as ex officio trustees, and government employees have contributed from their salaries. Yet, the fund remains outside the RTI Act, parliamentary scrutiny, and audit by the Comptroller and Auditor General (CAG).


    What is the PM CARES Fund?

    1. Establishment: Set up in March 2020 and registered as a public charitable trust under the Registration Act, 1908, with its trust deed registered in New Delhi on 27 March 2020, to support relief during public health emergencies and other disasters.
    2. Composition: The Prime Minister serves as ex officio Chairperson, and the Union Ministers of Defence, Home Affairs and Finance serve as ex officio trustees.
    3. Funding: Funded entirely through voluntary contributions from individuals and organisations, with the government stating it receives no budgetary support.
    4. Tax and foreign funding benefits: Donations qualify for a 100% deduction under Section 80G of the Income Tax Act, 1961, count as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013, and the fund holds an exemption under the Foreign Contribution (Regulation) Act (FCRA) to receive donations from overseas.

    What financial disclosure has the fund made?

    1. Last published statement: The last publicly available audited statement, for financial year 2022 23, showed an opening balance of Rs 5,415.65 crore, voluntary contributions of Rs 909.64 crore, total receipts of Rs 6,723.07 crore, total payments of Rs 439.38 crore, and a closing balance of Rs 6,283.68 crore as of 31 March 2023.
    2. Disclosure gap: Only the audited statements for 2019 20, 2020 21, 2021 22 and 2022 23 are available on the fund’s website, leaving the last three financial years without any published audit.
    3. Primary use: The fund has primarily financed India’s COVID 19 response and emergency health infrastructure.

    Why does the government’s “not a public authority” position sit uneasily with the fund’s structure?

    1. Government’s legal position: The government maintains the trust is not a public authority under the RTI Act, and the Ministry of Corporate Affairs retrospectively amended the relevant Companies Act rules to support this position.
    2. Activists’ counter: Activists argue the fund was presented as set up by the Union government, carries the sanctity of the Prime Minister’s office as chairperson, and drew contributions from government employees’ salaries, features that make it appear to be a public authority in substance.
    3. The accountability gap: The fund remains outside the RTI Act’s disclosure obligations, outside parliamentary scrutiny, and outside audit by the CAG, the three principal mechanisms that apply to ordinary government spending.

    What are the challenges to ensuring transparency in the PM CARES Fund?

    1. A named precedent: Activists cite the electoral bonds case, where sustained anonymity in political funding enabled quid pro quo arrangements between donors and the government, before the Supreme Court struck the scheme down in February 2024 for violating the right to information.
    2. No independent constitutional audit: Without CAG audit, no independent constitutional auditor verifies how contributions, including those from government employees’ salaries, are spent.
    3. Retrospective rule change: The Ministry of Corporate Affairs’ retrospective amendment to Companies Act rules narrows the scope for legal challenge based on the fund’s original design.
    4. CSR channel scrutiny: Because CSR contributions to PM CARES count toward companies’ mandatory CSR spending obligations, opacity in fund utilisation also affects corporate accountability for those obligations.
    5. No periodic review clause: Unlike time bound government schemes, PM CARES has no periodic legislative or parliamentary review clause forcing disclosure at fixed intervals.

    Conclusion

    The PM CARES Fund’s structure gives it the outward markers of a public authority, a Prime Minister led chairpersonship, ministerial trustees and salary contributions from government employees, while its legal classification as a private trust keeps it outside the RTI Act, parliamentary scrutiny and CAG audit. Three consecutive years without a published audited statement leave activists’ comparison to the electoral bonds case as the operative risk to track. Whether the fund publishes its pending audits or its RTI exempt status changes remains the open question.

    Back2Basics:

    Comptroller and Auditor General (CAG) of India

    1. Constitutional basis: The CAG is a constitutional authority under Articles 148 to 151 of the Constitution, appointed by the President.
    2. Governing law: Its powers and duties are laid out in the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971.
    3. Mandate: Audits all receipts and expenditure of the Union and state governments, including bodies substantially financed by government grants, and reports findings for placement before the legislature.
    4. Tenure and independence: Holds office for six years or until age 65, whichever is earlier, and can be removed only through a process similar to a Supreme Court judge’s removal.
    5. Relevance here: PM CARES Fund’s exclusion from CAG audit means its accounts face no scrutiny from this constitutional auditor, unlike most bodies with government backed establishment.

    PYQ Relevance

    [UPSC 2020] “Recent amendments to the Right to Information Act will have profound impact on the autonomy and independence of the Information Commission”. Discuss.

    Linkage: This PYQ tests the role of the RTI Act in promoting transparency and accountability in public institutions.The article examines the PM CARES Fund’s exemption from the RTI Act and the resulting concerns over public accountability.