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Unprecedented CSR Support To PM-CARES, But Is It All Good News?

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This post is a part of YKA’s dedicated coverage of the novel coronavirus outbreak and aims to present factual, reliable information. Read more.

On March 28, 2020, Prime Minister Narendra Modi announced the creation of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund [PM-CARES] to raise financial resources for combating COVID-19 health crisis. The government also notified that the donations made to the PM-CARES will be counted towards their mandatory Corporate Social Responsibility (CSR) obligations.

PM-CARES fund is powered by the cult of the personality of PM Narendra Modi.

As per the Crisil Foundations’ recent report, until May 15, the corporates contributed ₹4316 crores to the PM-CARES fund, which was 57% of the total CSR spend towards the COVID-19 crisis. On May 20, IndiaSpend reported that the total funds raised through PM-CARES until then were ₹9677 crores.  Thus, CSR expenditure makes a substantial proportion of almost 45% of the total corpus until the end of May.

PM-CARES can be considered as a large crowd-funding campaign by PM Modi. Generally, the accountability of a crowd-funding campaign is very limited to its large number of donors. However, in this case, the demand for accountability is on the basis of the campaign being a government initiative.  Thus, I believe the overwhelming corporate contribution is both good news and bad news.

Good news from the perspective of a fundraising campaign, in comparison to the alternative of the existing PMNRF (Prime Minister’s National Relief Fund). But, it’s bad news because the fund has not been able to generate much impact so far, and it has redirected the funds to a centralized corpus. The money could have been used in decentralized welfare efforts to manage the COVID-19 crisis or any social issue at the local level by NGOs and civil societies.

How Is It Good News?

It is good news because corporates are stepping forward to support the government at the time of a national health crisis. It is important to note that the corporate contribution to the PM-CARES fund is unprecedented when it is compared to PMRNF as any contribution to both the funds is counted towards CSR spending.

One of the criticisms of PM-CARES is that it is a redundant effort to make a separate fund for the current crisis as PMRNF already existed. But, CSR contribution to PMRNF has remained quite low, it was 1.2% (₹158 crores) of the total CSR spend in 2017-18. At its peak, PMRNF was able to raise ₹926 crores; it was during the Tsumani crisis of 2004-05.

In one of my previous articles on YouthKiAwaaz, I had mentioned that the contribution of corporates in PM-CARES is likely to be much higher than it could be expected from PMRNF because of its potential to provide high visibility to the donor. The ‘notion of visibility’, that is the visibility of the welfare effort and donor itself, is quite a common factor for the donation in the space of philanthropy.

PM-CARES fund is powered by the cult of the personality of PM Narendra Modi, the cult of being forthright, a masculine leader who has the ability to make quick decisions, and the ability to manage any crisis single-handedly. This image has been created through a constructed perception about decisions like demonetization, surgical strikes, balakot airstrikes, and the lockdown during the COVID-19 crisis. The popularity of PM Modi and his personality cult makes the contribution to PM-CARES much more ‘visible’ than it could have been in PMRNF. The visibility must have motivated the corporates to contribute to the PM-CARES fund.

CSR is also a means of creating a ‘socially responsible’ image of a corporate towards its stakeholders, viz., investors, people in the periphery of the production unit, consumers of the product and services, employees, and the government. PM Modi himself is the primary stakeholder in PM-CARES, a fund made for an active crisis; so, the visibility was higher.

Another reason is that the direct donation to the fund doesn’t need logistical and human resource support as it would be needed for funding a welfare program.  Programs such as upgrading infrastructure for a hospital or making an isolation center or a meal program for migrants need logistical and human resource support which needs more administrative effort and time.

How Is It Bad News?

PM Modi’s tweet mentioned that the primary purpose of the fund was to raise financial resources for the COVID-19 crisis. Health is a state subject in India and we can witness a large variation in health infrastructure and public health expenditure at the state level. Also, states with more corporate offices and production units tend to receive a greater proportion of CSR funds. Thus, states of Maharashtra, Andhra Pradesh, Karnataka, Delhi, and Gujarat received 40% of the total CSR funds.

A person serving milk to people
PM-CARES could have been used by the NGOs and civil societies working at the grassroots level to solve the COVID crisis as per the local context.

In my previous article on YouthKiAwaaz, I had also mentioned that PM-CARES could potentially redistribute the CSR funds towards the states which are more affected by the COVID-19 crisis or need to expand their public health infrastructure but don’t have enough funds. However, nothing much has happened in this direction so far.

The expenditure from PM-CARES that happened so far is ₹3100 crores, less than a third of the total fund available. Out of which, ₹2000 crores were allocated for procuring 50,000 ventilators, ₹1000 crores for the welfare measures, and rest for supporting academia, start-ups, and industry.

On the other side, there are various NGOs, civil societies, and even individuals who are implementing programs to provide food to migrants, direct cash transfer to the poor, masks, face-cover, and sanitizers at large scale and make COVID isolation centers. Since a large proportion of COVID-19 related CSR expenditure was moved to PM-CARES and much of it still remained unutilized, this resource has not generated as much impact as it could have generated so far.

It is difficult to set a counterfactual of what could have happened to the same amount of money had there been no PM-CARES fund. However, one alternative use of the fund could have been the regular corporate philanthropy for supporting the decentralized efforts which include corporates’ own active projects.

As Ramachandra Guha noticed in his critique of PM-CARES that a centralized fund undermines the federal structure of the country. While a centralized fund could have been used for redistribution, but in the absence of it, PM-CARES could have been used by the NGOs and civil societies working at the grassroots level to solve the COVID crisis as per the local context.

The Crisil Foundation report noted that “Thus, with the notification from the Ministry of Corporate Affairs (MCA) on mandated activities/spending which qualify as CSR spending under Covid-19; as well as assuming the companies will continue spending around the mandatory CSR mark, allocation to other –even ongoing – projects could come down.” The discontinuation of the active projects and no funding for the new projects must have led to job losses in the development and philanthropy sector.

Thus, it can be concluded that it is good news that the campaign of PM-CARES has been successful in mobilizing funds for the COVID-19 crisis and corporates stepped forward to help the government during the crisis. At the same time, the high amount of financial contribution has not been able to generate much of the impact. The regular mode of operation that is doing programs for the local level issues through the NGOs could have generated more impact during the COVID-19 crisis.

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