During the COVID-19 emergency, the
political and departmental authorities are making appeals and collecting
donations to face the crisis. If by ‘donation’ we mean an individual
voluntarily giving away a part of his wealth to a needy person, in a
disinterested manner, then, there is an issue with the manner in which governments
are collecting them. A government usually taxes its citizens and meets all its
expenditure, both productive and unproductive, which are used to meet planned
and non-planned expenditure. In all the newly independent and developing
countries their political leadership wanted to become ‘welfare states’ with the
obvious purpose of taking care of the total welfare of all the people in the
country. Accordingly, most Parliaments authorise governments to set aside a
fund for unforeseen circumstances, including natural or man-made disasters, in
their annual budgets.
Here, we are going to discuss the ethics of raising funds by governments from the public, apart from taxation, while the ethics of spending public funds would be touched only indirectly. Soliciting extra manpower or associating civil society organisations for immediate relief and reconstruction is people’s participation and it is indispensable. But soliciting funds from the public in an emergency betrays a government’s lack of planning and prevision for such events. It also reveals the fact that the taxes already collected have not been spent correctly. Since the government is authorised to ‘beg or borrow’, it is doing both. Borrowing for unproductive purposes is increasing the debt burden and tax money is being used to repay it. In order to show themselves as a strong government, the political and administrative authorities want to do everything and regulate everybody thereby preventing citizens’ initiatives.
Trust Deficit
The government’s
administrative staff is diverted during emergencies to technical or
humanitarian tasks for which they are neither qualified nor trained. During
emergencies, political leadership is not sufficient to take decisions and to
implement them; it is to be supplemented by other social leaders, relevant to
the issue. But, this has not happened during the COVID-19 health emergency. The
health and medical infrastructures available locally in the society are kept at
a distance, and the civil society organisations are just tolerated. They don’t
trust the private sector and they don’t recognise the NGOs working in the
field. Similarly, lakhs of migrant workers were blocked or dispersed,
unsupported by their own employers. As a consequence, the governments are now
spending lakhs of crores of public money to mitigate their suffering, and we
never know, when they would rejoin productive activities. But, appeals are made
for public contributions, but the expenditure is not transparent.
During emergencies, political leadership is not sufficient to take decisions and to implement them; it is to be supplemented by other social leaders, relevant to the issue.
1) The Indian constitution has authorised
Parliament to set up a Contingency Fund on behalf of the President of India and
it can be operated by executive action for disasters and related unforeseen
expenditures in it was raised to Rs 500 crore is to be from the
Consolidated Fund India and the amount should always to be full., the
Contingency Fund of each State Government is established, though they vary
state to state.
Further, looking back, we
find that in addition to such contingency funds, the Prime Minister’s National
Relief Fund, which was set up in 1948 to provide relief for the refugees from
Pakistan, continues to function ever since. The states too have their own Chief
Minister’s Relief Funds. Since 1985 the PM alone is spending it at his
discretion and by 2009 there remained an unspent balance of Rs.3,800. The funds
donated to it will not be counted as CSR funds and they should not be used to
fund any regular government scheme.
Now, on 28th 2020,
the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM
CARES) is also set up to collect funds from the public, in spite of the fact
that there already exists since 2005 a National Disaster Response Fund (NDRF),
which was set up precisely for this kind of situations under the Disaster
Management Act. Though the Act is invoked for the first time in March 2020 in
the wake of COVID-19, the NDRF is not declared open for public contributions
until July 2020. Contributions to PM CARES are tax-exempt and can be counted
against a company’s CSR. It is also exempt from the Foreign Contributions
(Regulation) Act, 2010. Although the Centre has been previously refusing
foreign aid to deal with national disasters, it again started accepting it
since the Kerala floods in 2018.
The recent fund is
registered as a private trust in New Delhi and the PM, who is the ex-officio
chairman. He is assisted by a staff member in his secretariat who, it is
claimed is working voluntarily without remuneration. In addition to the
ministers of Defence, Finance and Home as ex-officio members, three eminent
persons in relevant fields can be nominated to the Board of Trustees, though.
so far, this is not done. The website does not give more information and the
PMO does not consider the Trust as the Public Authority, and hence it refuses
to reveal any details when demanded by the public under the RTI Act. The
present Trust has appointed an independent auditor. The Ministry of Commerce
clarified that the contributions to the Chief Minister’s Relief Fund or any
state relief fund will not qualify as CSR expenditure, while any donation to
the PM CARES Fund will. However, donations to the State Disaster Management
Authority to combat COVID-19 can be counted as CSR expenditure. The fund
managers are refusing to reveal the amounts neither received nor spent.
2) Negative Consequences for the Social
Sector:
There are, according to
the Ministry of Statistics and Programme Implementation (MoSPI) about 36 lakh
non-governmental organisations in the country, out of which nearly 80% are in
the field actively fighting COVID 19. Everybody agreed that without this sector’s
response, the situation would have been catastrophic. Yet, the governments are
competing with this social sector, both in collecting funds from the public, as
well as in its operations in the field.
There are adverse
consequences of this soliciting of funds from the corporations and high-net-worth
individuals by the governments, particularly during the COVID19 emergency. Most
of the private sector companies have started contributing substantially to the
government funds, abandoning their traditional partners. It is estimated that
for the next two years, the private sector CSR funding for the non-profit
sector which is attending to many vulnerable sections of the society, such as
the elders, orphans, destitute, vulnerable women, slum areas, etc. would come down
drastically and they may be forced to sharply reduce their activities. They
have been, so far playing a significant role to help India reach its
Sustainable Development Goals of the UN. Now meeting those targets is
difficult. In any case, the profitability of many firms in the country would be
less and also impact their contribution to CSR. As of now 20% of all
philanthropy in India is from CSR funding. Even the projects that companies
have undertaken so far might be affected. At least, the companies would not
take up new projects. Though, in a recent judgment, the TS High Court, shocked
by the plight of the senior citizens the old age homes, suggested the
government should try to rope in the corporate sector to adopt them, it would
be a difficult task.
Wither Transparency?
Hence, the questions that
arise in this situation are, whether a government is justified in collecting
funds in two different ways for the same kind of expenditure? Even if it does
so, should not all the income and expenditure funded from the public contributions
be scrutinized by the Comptroller and Auditor General of India and be
accountable to the Parliament? Why should it not be transparent under the RTI Act?
When Governments collect voluntary funds do they still remain voluntary? Would
there be no quid pro quo of any sort? When does the government recognise the
democratic right of citizens to participate in the governance, especially
during the emergencies? The Western democracies give a large space for the
civil society organisations to operate freely in many areas of social
development without the bureaucracy intervening and the politicians being
jealous.
3) A)
In reality, when the state is intent upon collecting funds, such funds would
not be genuinely voluntary, since they are collected by the people in power.
For example, the contributions raised from the Defence staff during the months
of March and April 2020 to fight against COVID-19, are directly deducted from
their salaries, with the presumption that they have consented, when their top
commander had spoken on their behalf.
Even the private sector
Reliance group of companies, too have cut from the salaries of their employees
and handed over a big cheque to the PM. In the Southern states, the officials
of various departments have been excelling each other to reach out to the IT
industry professional associations, industries and manufacturing companies that
they regularly deal with, so as to arrange that the CEO personally hands over
the cheque to the C.M. or the next most important minister.
B) Sometimes, the operation gives ‘zero
net benefits. It is the case with the donations from the Public Sector
Undertakings, like Oil India or the Railway Board which had a photo opportunity
with the P.M. or other important minister, while they hand over a cheque for a
substantial amount. The Railway Board, at the same time, made the forlorn
migrant workers pay for their return journey. The Oil India charges the
citizens for their products and services, while PSUs in losses receive, at the
same time, grants from the annual budget.
During the Cold War,
similar things had happened in the Communist bloc. When a government hosted an
international event to express their international solidarity, it was declared
that the event was funded by the voluntary donation of a day’s wages of the
workers in the fields or in the factories. In a strictly planned and
centralised economy, the funds spent on such events came from the same source,
whether one called them voluntary or not.
C) Further, another anomaly is that
these funds are collected from a citizen, sent to New Delhi or to the state
capital, and from there they would be administered hierarchically by the
governmental machinery so as to reach back to the languishing neighbour of the
same citizen who donated. In this operation by an administrative mechanism, the
human face disappears as the donor contributed to the state as a kind of
obligation for being rich, and the beneficiary has received it from the
government officers, as a matter of right since he is in difficulties.
D) Sometimes, the transaction may not
be impartial since normal financial rules are not applied in the case of these
funds. Party leaders might channel these funds in favour of party-followers
since they are spent at the discretion of the political head, who has his
allegiance to a political party.
E) The funds might be given away
arbitrarily without any objective criteria. It is the case of ‘ex-gratia’
grants dispensed by the political authorities on a visit to a place where a
tragic event takes place. When a person dies in an accident of fire, explosion
or floods or riots, stirred by the emotional chord, the political personality
visiting announces, on the spot, grants, house-sites, jobs to the kith and kin,
etc. on behalf of the government. There is a stunning absence of any
established criteria in fixing the compensation for the loss incurred, and the
generosity seems to be modulated by emotional or even political factors. Same
is the case with expressing appreciation for artists and sports persons for their
achievements. The gifts offered are often unrelated to the cause to be
promoted. like the accident, compensation or enrichment is also unpredictable.
The practice is
anachronistic. As human civilisation advances, we must dispense with depending
on the bountiful heart of a political representative in case of an adversity
and, instead devise objective mechanisms of social protection by way of
institutionalized, universal and generalised insurance policies for all risks
and for all ages.
4) Our
Constitutional Objective:
Fortunately, we have
clear goalposts in our constitution i.e. to aspire to live in a secular,
democratic and socialistic pattern of society. It implies not just a political
democracy but also social democracy. It would signify that ultimately we should
turn the present state-centered economy into the society-centered economy,
where economic actors would function in their interest as well as in the
interests of others. It is not wild privatisation, where an individual acts exclusively
in his own best interest and enrichment. One enriches himself while enriching
the society as well by the same action, but not separately.
As a first step, under
the concept of the state capitalism, the state had taken over the reins of
economic power from a few; to not only prevent exploitation of the many, but
also for the growth and development of all. But, we have seen clearly and
bitterly the limits of such a totalitarian economy, where the party
apparatchiks, the bureaucrats and the political actors exercise power to
dominate and control the economic actors. Here, there is a permanent struggle
of political interests to usurp economic interests. The general welfare and
collective interests are sacrificed in the process. Thus social economy is the
liberal pragmatic version of communism, in which its proponent Karl Marx wanted
to eliminate the shameful exploitation of weak labour force by the strong
individual capitalist.
In view of the above
analysis, the conclusion that we should arrive at is, the individual or company’s
donations in cash or in kind, should be with a personal touch, from person to
person, directly. The support should reach the neighbours, so as to share their
sorrows and joys and to strengthen the feeling of living together among the
receiver and the giver. The receiver would personally recognise the good-will
of his neighbour and would be prompted to think in terms of returning this
gesture in any other way and in any other time. For a wider and bigger cause
and to reach other fellow human beings beyond the neighbourhood, there are many
experienced and credible national and international civil society
organisations, which can be approached. Such gestures of solidarity will
multiply the expressions of goodwill, trust and affinity among human beings
leading to more cordial mutual relations will be more cordial.
Dr. Rao VBJ Chelikani
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