Policy | Why PM CARES and other relief funds must be audited by CAG

A daily wage labourer waits for free food at a construction site, in New Delhi, India, April 10. REUTERS

On April 24, Yashwant Sinha, former Union Finance Minister, tweeted his apparent shock at the fact that the new PM CARES fund, set up for collection of donations to fight COVID-19, will not be audited by the Comptroller and Auditor General (CAG). The next day he went on to tweet that the Prime Minister’s National Relief Fund (PMNRF), which could have also been utilised for the purpose, was more transparent. He is wrong, but it should shock us that a two-time finance minister is almost oblivious to the functioning of India’s most recognised relief fund.

The government’s response has been to merely say that PM CARES is set up no differently from the PMNRF. That is, both are public charitable funds, without any budgetary support, and therefore, neither fund comes within the purview of the CAG — this is a specious argument.

However, for somebody of Sinha’s eminence to be ‘shocked’ is itself testament to the haziness that veils not just the two funds in question, but also similar funds titled after Chief Ministers — most of them opaque in its functioning, even as it collects donations using State apparatus.

A scrutiny of the websites of each of these state funds will show that there is none to negligible details about the fund in public domain. Punjab, Gujarat, Telangana, Tamil Nadu, and Delhi, to name just a few, give no details about their respective funds, except links for facilitation of the payment. This means that donations made to the CM relief funds in these states are based on blind faith — the public does not know what the rules governing the administering of the fund are, who takes decisions on allocation, or who the donors or beneficiaries are.

This would not have been such a cause for concern if the funds were audited by the government’s auditors. The defence that these funds are audited by a private auditor do not hold water. There is a reason why the CAG is a constitutional post under Article 148 with safeguards against removal or even altering his/her terms of service adversely. A private auditor, that is, a regular chartered accountant firm, cannot be expected to stand up to the might of the government and audit objectively. A CAG audit brings with it the additional benefit of transparency, since the reports, as well as comments are public, and open to public scrutiny.

There are also states at the other end of the spectrum. Odisha claims that the CM relief fund is funded by budgetary support, in addition to voluntary donations. This would ordinarily bring the fund within the purview of the government’s audit. The website of Maharashtra’s CM Relief Fund not only has the rules and guidelines for operating the account, but also gives a list of donors, and a link for RTI queries.

States like Kerala and Bihar have some version of this. Both states publicise the government orders passed in relation to the fund, as well as give details regarding both receipts into (Kerala in aggregate, while Bihar gives the list of donors). Kerala also publicises the allotments of the funds, which are mostly into government schemes, which presumably, would in turn be audited, giving the public a trail to investigate the money flow.

Madhya Pradesh even goes as far as to publicise the list of beneficiaries, though that data doesn’t seem to have been updated since 2010. The state also gives real-time data on online donations received, but details of offline donations (if any) haven’t been updated since 2010.

The PMNRF, interestingly, had much more transparency in the past. The receipts, as well as payments during the Congress-led United Progressive Alliance (UPA) tenure, (accessed from the archived website of the then Prime Minister, Manmohan Singh) gives the list of all the beneficiaries of the scheme during that period, and many more details.

On the other hand, the (current) Prime Minister’s website, the ‘FAQ relating to PMNRF’ section makes it clear that details of beneficiaries will be outside the scope of RTI. It states that “the information sought is purely personal in nature, disclosure of which to the third party may cause unwarranted invasion into privacy of the individual(s). Hence, the information cannot be provided as it is exempted under Section 8(1)(j) of the RTI Act”.

Another factor to consider is whether the funds’ non-governmental status violates Article 266(2) of the Constitution, which mandates that all public money received by or on behalf of the Government of India or of the state governments shall be credited to the public account of India or of the states. The funds are obviously received because of its quasi-official nature. We all know several instances where government departments, as well as PSUs, take executive decisions to cut employee salary (a day’s pay, usually) for contribution to the fund (with an opt-out, of course). A contribution to a purely private fund wouldn’t be accepted without murmur.

A further argument that is made in defence of opacity is that the fund is purely discretionary. That is, the Prime Minister has absolute discretion over what projects to pay the amounts to, and therefore, it cannot be subjected to the test of audit. This again is a specious argument. Members of Parliament (MPs) and Members of Legislative Assemblies (MLAs) also have discretionary powers over their constituency funds, but these still have checks and balances in the form of administration by the district collector (or a similar officer) as well as the requirement of audit certificates.

Then there’s the familiar bogey: “so what? It is just relief money”. An audit essentially looks into who the beneficiary of an allotment was, whether they actually carry out the functions they claim to, or were they a front set up merely to receive the donation. Take, for instance, a businessperson who has donated (let’s even say, in black/cash) to a party fund. This money can be repaid from public donations by paying to a charity set up by the businessperson, ostensibly for relief work. The possibilities for money-laundering are multiple, and therefore, there can be no excuse for non-transparency.

Perhaps a counter-question is merited. If the fund is purely of a private nature, then why use the Prime Minister’s (or Chief Minister’s) title at all in the name. Why use government resources, and why involve government servants in its administration?

Abraham C Mathews is an advocate practicing in Delhi, and a chartered accountant. Twitter: @ebbruz. Views are personal.