PM Cares vs PMNRF: What is the fuss about?

The Supreme Court has dismissed petition seeking transfer of PM Cares Fund to PMNRF. Controversies surrounding PM Cares Fund explained here

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Prime Minister Narendra Modi announced setting up of PM Cares Fund in March for receiving contribution to deal with situations arising out of Covid-19 pandemic.

On March 28, Prime Minister Narendra Modi announced in a series of tweets the setting up of PM Cares or the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund. The first coronavirus nationwide lockdown had come into force three days before the announcement.

The announcement was met with instant opposition. Congress president Sonia Gandhi questioned the decision to set up a new body when there was already a relief fund in the form of the Prime Minister's National Relief Fund (PMNRF).

There have been demands since then for transferring the money collected in the PM Cares Fund to the PMNRF. Petitions were filed in the Supreme Court after the government did not take note of such objections.

Now, the Supreme Court has dismissed the petition seeking transfer of fund or merger of PM Cares Fund with the PMNRF. This ruling formally upholds the separate identity of the PM Cares Fund.

Announcing the PM Cares Fund, PM Modi called for donations from individuals from all walks of life as well as organisations. All donations -- with no cap -- were to be exempt from tax liabilities.

Companies donating to the PM Cares Fund are allowed to earmark their contribution under the Corporate Social Responsibility (CSR).

This facility of getting uncapped corporate donations is not available to the PMNRF or the Chief Minister's Relief Fund in states. In fact, the previous CSR guidelines restricted the use of corporate donations to fund government schemes.

A government panel had earlier recommended against allowing CSR contributions to the PMNRF calling it a "regressive incentive". The panel held that such donations would amount to enjoying double benefit of tax exemptions.

Another objection against PM Cares Fund was that originally it was not subject to audit. On the other hand, PMNRF expenditures are audited by an independent auditor. Later, in the face of strong public criticism, the PMO got an auditor for PM Cares Fund.

There is another difference between the PM Cares Fund and the PMNRF, in the composition of the trusts that manage these funds. The prime minister heads both the funds.

In PM Cares Fund, the prime minister can nominate three eminent persons to the Board of Trustees. The ministers of defence, home affairs, and finance are ex-officio trustees of the fund.

In the case of the PMNRF, it was originally managed by a committee that had besides the prime minister and his deputy, the finance minister, the Congress president, a representative of the Tata Trustees, and an industry representative. The committee approved all expenditures of the PMNRF.

This organisational set changed in 1985, when the prime minister was made the sole discretion for fund disbursal. A joint secretary in the PMO, on an honorary basis, administers the PMNRF. And, much against what some people have asserted, the Congress president does not have a role in disbursal of money from the PMNRF.

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