PM-CARES Fund Under Scrutiny: UPSC Analysis of Governance, Transparency & the 2025 Hybrid Accountability Reforms

The PM-CARES Fund: A Paradigm Shift in India’s Emergency Response Framework

In the tumultuous early days of the COVID-19 pandemic, on 27th March 2020, the Indian government announced the creation of a dedicated national fund to deal with any kind of emergency or distress situation. This entity, the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES Fund), was established with the stated objective of having a dedicated national fund with the primary objective of dealing with, and providing relief against, any kind of emergency or distress situation. Its creation marked a significant and contentious development in India’s public finance and disaster management landscape. While positioned as a flexible and responsive tool for crisis management, it immediately sparked intense debate regarding its legal status, transparency, accountability, and its relationship with pre-existing statutory mechanisms like the National Disaster Response Fund (NDRF). For UPSC aspirants, understanding the nuances of the PM-CARES Fund is not merely about a current affairs topic; it is a comprehensive case study that intersects with core concepts of Indian Polity, Governance, Public Administration, and Ethics. It forces a critical examination of the balance between governmental flexibility in crises and the foundational principles of transparency and public accountability that underpin a democratic state. The fund’s journey, from its inception to the legal challenges it has faced and the operational role it has played, provides a rich tapestry of issues that are central to the functioning of the Indian state and its governance architecture.

The rationale provided for its establishment was the need for a mechanism that could rapidly mobilize resources from the public, corporations, and international donors to address the unprecedented challenges of the pandemic. The Prime Minister himself became the ex-officio Chairman, lending his authority and credibility to the initiative. The fund was registered as a Public Charitable Trust under the Registration Act, 1908, in New Delhi, a legal classification that would become the central pillar of the government’s defense against calls for greater transparency. This structure, distinct from a government-created statutory body, allowed it a degree of operational autonomy and speed that, its proponents argued, was essential for an agile response. However, this very structure also placed it outside the direct oversight of institutions like the Comptroller and Auditor General of India (CAG) and the purview of the Right to Information (RTI) Act, 2005, raising profound questions about probity and the public’s right to know how their contributions were being utilized. The ensuing discourse has been polarized, with one side emphasizing the fund’s successes in procuring essential medical supplies and funding vaccine development, and the other highlighting the potential for opacity and the undermining of established, more accountable disaster management frameworks. This article provides a deep, analytical dive into the PM-CARES Fund, deconstructing its legal framework, dissecting the major controversies, comparing it with other national funds, and evaluating its overall impact on India’s governance ecosystem, with a special focus on the recent December 2024 Parliamentary Committee recommendations that seek to forge a new path for its accountability.

The Legal and Structural Anatomy of the PM-CARES Fund

Understanding the PM-CARES Fund requires a precise grasp of its legal and organizational structure, as these elements are at the heart of the controversies surrounding it. Unlike funds established by an Act of Parliament, PM-CARES is a trust, governed by the provisions of the Indian Trusts Act, 1882. This distinction is fundamental. A statutory fund is a creature of law and is bound by the rules and oversight mechanisms prescribed by the legislature. A trust, conversely, is governed primarily by its own ‘trust deed’, which outlines its objectives, powers, and governance structure. This provides immense flexibility but can create a governance silo, insulated from conventional public scrutiny.

Composition and Management: The fund’s governance is vested in a Board of Trustees, designed to blend high-level governmental authority with external expertise.

• Ex-officio Chairman: The Prime Minister of India.
• Ex-officio Trustees: The Minister of Defence, the Minister of Home Affairs, and the Minister of Finance.

The Prime Minister, as the Chairperson, possesses the authority to nominate three eminent persons as trustees to the Board. These nominees are expected to be experts in fields such as health, science, social work, law, and public administration. This blended structure is intended to provide both administrative authority and specialized guidance. In a significant move in 2022, former Supreme Court judge KT Thomas, former Deputy Speaker Kariya Munda, and veteran industrialist Ratan Tata were appointed as trustees, a step aimed at enhancing the credibility and functional wisdom of the board. The trust deed grants the Board of Trustees, particularly the Chairperson, wide-ranging powers to manage the fund’s assets and direct its expenditure, without needing parliamentary approval for its operational decisions.

Financial Framework: The fund is designed to accept voluntary contributions from a wide array of sources, a feature that enabled its rapid accumulation of a massive corpus.

• Individuals and Organizations: Both domestic individuals and entities can contribute.
• Corporate Social Responsibility (CSR): In a pivotal clarification, the Ministry of Corporate Affairs announced that contributions to PM-CARES would be considered eligible Corporate Social Responsibility (CSR) expenditure under Section 135 of the Companies Act, 2013. This was a game-changer, as it incentivized large corporations to channel their mandatory CSR funds into PM-CARES.
• Foreign Contributions: The fund was granted an exemption from the Foreign Contribution (Regulation) Act, 2010 (FCRA). This is a significant departure from the stringent regulations most NGOs face, allowing PM-CARES to receive foreign donations with minimal regulatory friction. This exemption was granted on the basis that the fund was established by the government, an argument that seems to contradict the claim that it is not a government fund for RTI purposes.
• Tax Benefits: Donations are eligible for 100% tax deduction under section 80G of the Income Tax Act, 1961.

Fun Fact: Within its first week of inception in 2020, the PM-CARES Fund reportedly collected over ₹6,500 crore (approximately USD 870 million), showcasing the immense power of combining public sentiment with high-level government appeal and corporate incentives.

Audit and Transparency Mechanism: This is the most contentious aspect of the fund’s design. The trust deed specifies that the fund will be audited by one or more qualified independent auditors appointed by the trustees. For the initial years, the audit was conducted by M/s SARC & Associates, a New Delhi-based chartered accountancy firm. This arrangement stands in stark contrast to the standard practice for government funds, which are mandatorily audited by the Comptroller and Auditor General of India (CAG), a constitutional body under Article 148 whose reports are submitted to Parliament and its committees. The government has consistently argued that since PM-CARES is a public charitable trust and not a “fund of the Government of India,” a CAG audit is not legally mandated. Critics argue that given the fund is chaired by the Prime Minister, uses the “.gov.in” domain, is promoted by government machinery, and effectively serves a public purpose indistinguishable from a state function, it functions as a de facto government body and should be subject to the highest standards of public audit to ensure probity and accountability.

The Core of the Controversy: RTI, NDRF, and Judicial Scrutiny

The creation of the PM-CARES Fund led to immediate legal and political challenges, primarily centered on three interconnected issues: its exclusion from the RTI Act, its relationship with the statutory NDRF, and the Supreme Court’s subsequent rulings.

1. The ‘Public Authority’ Debate and the RTI Act: The Right to Information Act, 2005 is a cornerstone of transparency in Indian governance. It empowers citizens to seek information from any “public authority”. The definition of a “public authority” under Section 2(h) of the RTI Act includes any body “owned, controlled or substantially financed” by the appropriate government. The Prime Minister’s Office (PMO), in response to numerous RTI applications, declared that the PM-CARES Fund is not a “public authority.” The reasoning provided was that it is a charitable trust that is not owned or controlled by the government. It argued that the presence of ministers as ex-officio trustees does not constitute government control, and since it runs on voluntary public donations, it is not “substantially financed” by the government.

This stance has been widely criticized by transparency advocates, former information commissioners, and legal experts. They argue that the PMO’s interpretation is a legalistic smokescreen that ignores the substantive reality of the fund. The counter-arguments are compelling:

• Control: The Prime Minister is the final authority, and the presence of three senior cabinet ministers as trustees constitutes effective and pervasive control by the executive branch of the government.
• Symbolism and Infrastructure: The use of the Prime Minister’s title, the national emblem, and the “.gov.in” domain creates an undeniable impression of it being a government entity, leveraging state credibility to solicit funds.
• Substantial Indirect Finance: While direct budgetary support is absent, the government provides indirect support through tax exemptions and the use of its administrative machinery for promotion and management.

The refusal to entertain RTI queries has created an information vacuum, fueling speculation and mistrust about the fund’s specific expenditures, beneficiary selection criteria, and procurement processes.

2. The Statutory Primacy of the NDRF: A major criticism leveled against PM-CARES is that it bypasses and potentially weakens the existing, robust, and legally mandated framework for disaster management. The Disaster Management Act, 2005, enacted in the aftermath of the 2004 Indian Ocean tsunami, established a comprehensive, three-tiered structure: the National Disaster Management Authority (NDMA), State Disaster Management Authorities (SDMAs), and District Disaster Management Authorities (DDMAs). The Act also created the National Disaster Response Fund (NDRF) under Section 46. The NDRF is a statutory fund, placed in the “public account” of India, audited by the CAG, and its functioning is accountable to Parliament. Critics argue that by creating a parallel, non-statutory fund like PM-CARES, the government has created a redundant structure that operates in an opaque manner, undermining the very framework that Parliament had legislated for this exact purpose. It raises questions about why a new, less accountable fund was needed when a transparent, statutory fund for the same purpose already existed.

3. The Supreme Court’s Verdict: In August 2020, the Supreme Court of India delivered a landmark judgment in the case of Centre for Public Interest Litigation (CPIL) vs. Union of India. The petition sought the transfer of all funds from PM-CARES to the NDRF and a declaration that PM-CARES should be subject to the same transparency and accountability protocols as the NDRF. The Court, however, ruled in favor of the government on several key points:

• It affirmed that the PM-CARES Fund is a valid public charitable trust and there is nothing illegal about its creation.
• It held that there is no statutory prohibition on individuals or corporations making voluntary contributions to any fund, including PM-CARES, and therefore, these funds are not required to be transferred to the NDRF. The court viewed them as two separate entities with voluntary contributions being permissible to both.
• It rejected the plea for a new national disaster management plan, stating that the existing plans were sufficient.
• It stated that the audit of PM-CARES by independent auditors was sufficient and there was “no occasion” to direct a CAG audit, as it was a public charitable trust.

This judgment provided significant legal validation for the PM-CARES Fund’s existence and operational model. However, legal scholars have pointed out that the judgment focused more on the legality of its creation and the voluntary nature of donations, rather than delving deep into the substantive questions of governance and accountability that arise from its operational reality.

Captivating Stat: By 2023, the PM-CARES fund had sanctioned the procurement of over 6.6 crore doses of COVID-19 vaccines and the installation of more than 1,500 PSA Oxygen Generation Plants across the country, demonstrating its significant role in bolstering India’s health infrastructure during the crisis.

Recent Developments: The Push for a Hybrid Accountability Model (2024-2025)

While the legal battles settled some questions, the political and academic discourse continued. A significant recent development emerged in December 2024, when the Parliamentary Standing Committee on Finance, in its report titled ‘Review of Management of Public and Non-Statutory Funds’, made crucial observations regarding PM-CARES. While acknowledging the fund’s utility during the pandemic, the committee’s report highlighted the “persistent trust deficit” stemming from its exemption from RTI and CAG audits.

The committee, in a move towards constructive reform, proposed a “hybrid accountability model” as a potential way forward. This model aims to strike a balance between the government’s stated need for operational flexibility and the non-negotiable democratic principle of public accountability. The key recommendations of this model are:

1. Dual-Layer Audit: The regular financial audit could continue with an independent chartered accountancy firm to ensure speed and flexibility in fund disbursement. However, the CAG should be empowered to conduct a “performance audit” or a “social impact audit” of the PM-CARES Fund once every two years. This would not be a transactional audit but would focus on assessing whether the funds were used economically, efficiently, and effectively to achieve their stated objectives.
2. Suo Motu Disclosure: The committee strongly urged the PM-CARES trust to adopt a policy of proactive and regular disclosure of its major expenditures, projects funded, and beneficiary details on its official website on a quarterly basis. This would be a voluntary step to enhance public trust, bypassing the debate over the RTI Act’s applicability.
3. Clearer Investment Guidelines: The report recommended that the trust should formulate and publish clear, transparent guidelines for the investment of the fund’s corpus to ensure the safety and optimal returns on the public’s money.

While these recommendations are not legally binding on the trust, they represent a significant political and institutional pressure point. Coming from a cross-party parliamentary committee, they have reignited the debate in 2025 on finding a middle path that balances flexibility with accountability, moving the conversation from confrontation to potential reform.

Analogy: The proposed hybrid model is akin to corporate governance standards where a company has its internal auditors for day-to-day financial checks, but an external, independent statutory auditor verifies the overall financial health and compliance, ensuring shareholder confidence. Here, the CAG would act as the ‘shareholder’s auditor’ on behalf of the citizens of India.

Comparative Analysis: PM-CARES vs. PMNRF vs. NDRF

A clear understanding of the PM-CARES Fund is incomplete without comparing it to the two other major national-level funds: the Prime Minister’s National Relief Fund (PMNRF) and the National Disaster Response Fund (NDRF).

Mnemonic for PM-CARES Trustees: To remember the ex-officio trustees of the PM-CARES Fund, remember that in a crisis, the PM Defends the Home with Finance. (PM, Defence Minister, Home Minister, Finance Minister).

Fun Fact: The Prime Minister’s National Relief Fund (PMNRF) was established in 1948 by India’s first Prime Minister, Jawaharlal Nehru, with an initial contribution from his personal funds, to assist displaced persons from Pakistan. It has operated as a trust for over 70 years, setting a precedent for PM-led non-statutory funds.

Critical Policy Appraisal

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