India’s unfathomable Covid tragedy has left the country gasping for breath, and no oxygen can be found. Hospitals are overrun, and are often unable to help even those lucky enough to be admitted. Desperate relatives are turning to social media and the black market for help, as beleaguered crematoriums shift from unprecedented 24/7 hours to the horrors of mass cremation to keep up with demand. In the midst of this appalling tragedy looms the question: Why was the government so unprepared? And, more specifically, whatever happened to the billions of dollars raised last year through the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (known as the “PM Cares Fund”)?
Prime Minister Modi set up the PM Cares Fund over a year ago, on March 27th, 2020, to raise funds for Covid preparedness and response. In answer to Modi’s appeals to Indians the world over, money poured in: the Fund raised almost a billion dollars in just its first week, and is now thought to have substantially more. Yet there has been little transparency about how the Fund has raised or used its money. The Fund’s website contains no information as to its value more recent than March 31st, 2020 (four days after its creation); the best available estimates of the fund’s holdings are compiled from donations disclosed by large companies and wealthy individuals. As for how the PM Cares Fund money has been used, the Fund makes little information publicly available, and does not use public competitive bidding processes for selecting contractors.
This lack of transparency is made possible because, in contrast to existing programs like the Prime Minister’s National Relief Fund (PMNRF), the PM Cares Fund was set up as a charitable trust rather than a public authority, putting it outside the scope of India’s Right to Information (RTI) law and other rules that apply to public authorities. Unfortunately, in a seriously flawed decision, the Indian Supreme Court upheld the ludicrous conclusion that because the PM Cares Fund is financed by private donations rather than public money, the Fund is not a public authority—notwithstanding the facts that the government conceded that it controls the Fund. (Modi himself chairs the Fund, three of his cabinet members are trustees, and he nominates the other three trustees. The Fund’s website is also hosted by the government domain.)
As a result of this decision, the PM Cares Fund allows the Prime Minister to dole out huge sums with very little transparency or accountability—a recipe for corruption if there ever was one. Has the PM Cares Fund been used corruptly? It’s hard to know, precisely because the lack of transparency has impeded close scrutiny of how this money has been spent. But what little information exists is not encouraging. Of the Rs. 3,076 crores (roughly US$420 million) received by March 31st 2020, the government claims to have spent Rs. 2,332 crores (roughly US$318 million) on purchasing 60,000 ventilators. Where did the rest of the money go? Even the expense of the ventilators poses several questions. Last fall, the PM Cares Fund’s website claimed to have supplied over 50,000 ventilators to government hospitals, but Ministry of Health data revealed it only dispatched approximately 20,000, and two government-appointed panels later flagged concerns about the quality of the these ventilators. It is unclear where and how the remaining ventilator funding has been dispensed.
There is a fine line between corruption and mismanagement, but the two bleed together where, as here, the mismanagement comes from contracts awarded to companies with close government ties. Of all the vendors the PM Cares Fund contracted with, only one met the certification and accreditation requirements in the floated tenders. Two firms were given large advance payments even though they were dropped from the technical committee’s ventilator procurement list for quality failures. There is no information suggesting the advances were ever returned, nor that the government modified its order. It’s possible that the explanation is mismanagement rather than corruption. But it’s at least suspicious that one of these firms, Jyoti CNC, is based in Modi’s home state of Gujarat, and has extremely close ties with Modi’s party, the BJP. (Modi even infamously sported a monogrammed suit that was a gift from one of Jyoti’s promoters back in 2015.) The BJP-led Gujarat government defended the company even amidst scathing reports of inadequacy.
There are also troublesome examples of Modi seeming to use the PM Cares Fund strategically to garner political support. For example, last August Modi announced financing from the Fund for two Covid hospitals in Bihar, conveniently ahead of Bihar’s October elections, even though other states were harder hit. Furthermore, as I have discussed previously on this blog, Indian law makes it easy for corporations to funnel political contributions through (alleged) charitable trusts that are actually controlled by politicians or their allies; the donors can disguise these contributions as tax-exempt charitable donations that are part of their company’s “corporate social responsibility” (CSR) program. As a public charitable trust, the PM Cares Fund is eligible to receive such contributions. Sending money into a fund controlled by the PM while allegedly meeting CSR requirements reeks of corrupt influence and quid pro quo. Worse, CSR expenditure, unlike other spending disclosed by companies, does not require statutory auditors.
Through the PM Cares Fund, Prime Minister Modi has exploited his position and the Covid crisis to set up a private pool of money exclusively under his control, one that he and his allies can use to advance their interests at the expense of the Indian people. It is unlikely that Modi will be held accountable for these abuses in a court of law. But the court of public opinion is another thing. Civil servants are already asking hard questions about the PM Cares Fund and its lack of transparency. As Modi’s indefensible mishandling of the Covid crisis continues to hurt his party politically, civil society, journalists, and ordinary citizens need to continue to press for answers as to how exactly the billions of dollars controlled by the PM Cares Fund were raised and spent.