On 28th March, Prime Minister Narendra Modi announced the creation of the PM-CARES fund and gave a call for the nation-wide donation through a tweet that said “People from all walks of life expressed their desire to donate to India’s war against COVID-19. Respecting that spirit, the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund [PM-CARES] has been constituted. This will go a long way in creating a healthier India”.
The announcement followed a windfall of donations by various Bollywood and sports celebrities, corporates, many politicians and some Public Sector Undertakings (PSUs).
The creation of the fund is being criticized on two grounds, lack of transparency and creation of additional funds despite the existence of Prime Minister’s National Relief Fund (PMNRF). Shashi Tharoor criticized the trust by saying that it lacks transparency and questioned the need for
An article published in Business Standard, partly challenges this criticism by pointing out the differences in the institutional structure of PM-CARES which makes it more democratic than PMNRF.
While PM-CARES lacks transparency in its current form, I believe that by creating a separate fund, PM has used his own brand image and the personality cult in mobilizing the funds which PMNRF couldn’t have done, PM-CARES able to raise Rs. 6500 crores in a week, much higher than the total amount available PMNRF.
PM Narendra Modi has developed a personality cult of being a forthright and a masculine leader who can single-handedly manage any crisis. It’s an image that he has been able to construct through decisions like demonetization, surgical strikes after Uri attack and balakot airstrikes. Powered by his personality cult, PM-CARES also gives space to organizations and individuals to create an image of being socially responsible, and a contributor to ‘nation’s effort of fighting’ COVID-19. The ‘visibility’ of an individual or organization’s effort is higher than PMNRF that could have nudged individuals, corporates or celebrities to contribute.
It is worth noticing that the contribution to both PM-CARES and PMNRF is exempted from income tax and counted as a part of Corporate Social Responsibility (CSR) expenditure under Companies Act 2013. This fact can help in understanding the notion of ‘visibility’ to some extent.
Trends in CSR Spending and PMNRF
CSR spending is the most prominent medium of corporate philanthropy in India which is mandated through section 135 of Companies Act 2013. Business Standard noticed that the donations to PMNRF declined sharply after 2004 and mentioned that it meagre 106 crores between 2008-09 and 2012-13. Even at it’s peak in 2004-05, during Tsunami crisis it was 926 crores, which included all kinds of donations not just from corporates.
In 2014-15, contribution to PMNRF became a part of corporates’ mandated CSR spending which increased the donations to the fund. In four years (2014-15 to 2017-18), on an average, corporates has spent almost Rs. 12,000 crore per year. During this time, PMNRF has not been able to attract a lot of funding from corporates. During this time, contribution to PMNRF has not been more than 2.2% of the overall CSR expenditure and it reduced to 1.2% (Rs. 158 crores) in 2017-18. Even among corporates, PSUs contributed far more than private companies.
Coporate sends more CSR funds in richer states gets due to the presence of companies’ offices and production units in those states. Maharashtra, Andhra Pradesh, Karnataka, Delhi, and Gujarat receives 40% of the total CSR Spending.
Why corporates and others are contributing to PM-CARES?
In my opinion, one of the key reasons behind corporate spending in the social sector has been the ‘visibility’ of its brand to its stakeholders. All companies spend their part of philanthropy funds in the geographical areas closer to their production units and key offices because of the associated visibility of the efforts to the people living in the periphery and to the other stakeholders viz, employees and consumers. This also helps in building an image of their organization of being ‘socially responsible’. The image is a kind of communication to everyone closely associated with their organization and brand, this includes government as well. This is also a key reason why PSUs spend CSR funds in supporting government schemes and policies more than the private sector. This is popularly known as ‘stakeholder engagement’ in the development sector.
The general visibility of expenditure in PMNRF tends to be low. Thus, gets only a small proportion of total CSR expenditure.
I think making of a separate fund for COVID-19 crisis, helped in increasing the visibility of a corporate donation which motivated many corporates to come forward in contributing to this initiative. The visibility helped the government mobilizing more funds than PMNRF ever raised through any corporate donation. The notion of visibility also applies to celebrities and many individuals. For celebrities, the visibility helps in re-establishing the public image of a socially responsible individual. Think about Salman Khan’s ‘Being Human’ initiative or Akshay Kumar’s image of a nationalist or a patriot actor from this perspective.
Figure 1 PM-CARES Fund (Source: https://countercurrents.org/2020/04/pm-cares-fund-need-for-transparency/pmcares-fund)
Association of ‘visibility’ with welfare and solving a crisis
It’s important that the notion of ‘visibility’ doesn’t carry any negative connotation. I am not trying portrait corporates in a negative picture of being someone who is more concerned in image building rather than solving the crisis. I believe that welfare itself is closely associated with the notion of visibility. This is equally applicable to individuals. Whenever we make an effort of bringing a social change, we want people to acknowledge that effort. Informing others about the efforts creates this visibility and forms an image of being socially responsible. I don’t support Ramachandra Guha’s statement that the initiative encourages “sycophancy, chamchagiri and loyalty to the Prime Minister.”
This notion of visibility is also applicable to our governments (union or state) and political leaders who spend millions of rupees in promoting and highlighting their efforts of public welfare during elections. In the case of governments, the voter becomes a key stakeholder. The notion of visibility is important to get votes even though welfare is an obligation of any government. This includes all parties across the ideologies. Unless some welfare effort is visible, it tends to become obscure for the concerned stakeholder. A Hindi proverb “Jungle mein more naacha kisne dekha”, appropriately describes the condition.
Is PM-CARES “unfederal”?
Maybe Ramachandra Guha is correct in that analysis, a centralized fund undermines the federal structure but India is not completely federal as well. In case of health, despite it being a state subject, central government has gradually increased its spending from 2005, the year of the launch of National Rural Health Mission (NRHM, now NHM) that constitutes almost half of the total public health expenditure in India. Much of the issues related to the lower expenditure in public health are more because of the lack of the state’s contribution to it.
Guha further added “Why should Uday Kotak or Akshay Kumar living in Mumbai donate to the Prime Minister? People are suffering in the next street. They can donate directly to Jaslok Hospital. The relief is primarily at the State level.”
I am afraid, Jaslok Hospital or any other local hospital or even a district may not give the same visibility to a donor as offered by PM-CARES. It’s not a fixed amount which anyone reserves for the donation, a donation is a rational act, and a donor may not redirect the same donation to anywhere else. It’s not generally a need-based effort. It’s possible that an organization or individual may not even choose to do something due to the lack of visibility or acknowledgement.
PM-CARES as a redistributable resource
The government has not yet announced its strategy of using the PM-CARES fund. However, one of the ways of using PM-CARES is by redistributing these additional funds in supplementing the existing health facilities in a particular area that has more need.
Health is a state subject in India. As a result, inter-state variation in public heath expenditure has created a large inter-state variation in available public health infrastructure. From 2004, the year of the launch of the National Rural Health Mission (NRHM, now NHM) has increased the role of the central government in health. During an unprecedented crisis like a pandemic, existing health infrastructure in a state can create limits to its capacity of controlling the disease in the region. In such pressure, the role of central government increases, it is well-demonstrated in 9th April’s press briefing by central government by giving away a summary of India Covid-19 Emergency Response and Health System Preparedness Package through which central government distributes a fund or Rs. 15000 crores to various states for managing the health crisis.
Similarly, the PM-CARES fund can be potentially used for redistribution among states and the regions who are more affected by the pandemic and have lesser health infrastructure to manage the crisis. But, the key problem in centralized funding is the number of bureaucratic procedures involved in the devolution of funds from center to the state. This alone can jeopardize the potential use of the fund as a useful resource to counter COVID-19, as Blanchard and Starrett said, the virus moves faster than bureaucracy.
Another issue that the government can choose to redistribute the funds on the basis of the political logic and, not on the basis of the need. In a nation-wide outbreak, it is possible that the government would choose to give more funds to the state governments led by the parties in the ruling alliance. To ensure that doesn’t happen, there needs to be a transparent mechanism of redistribution that is guided by the need-based transfers of the funds.