April 14, 2001


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The Rediff Special/ Ramesh Menon

Nobody knows how much money has come to Gujarat!

When the Gujarat earthquake struck, millions of people, especially Indians all over the world, wanted to help. The only way they could do so was by sending money; only, they did not know whom to send the money to.

Would the money be spent in the right manner? Would it help the victims? Or would it be siphoned away?

These were among the many questions that tortured would-be donors. Some e-mailed their friends in India asking for advice. Others asked Indian web sites what they should do. Many called their contacts in India for names of NGOs that they could trust.

Unfortunately, not too many people in India knew the answers.

Vishwa Bandhu Gupta, additional income tax, Delhi, found many friends asking him which organisation could be relied upon to handle contributions for quake relief.

As an income tax officer, he knew of many trusts that came up overnight after a calamity, collected huge sums of money, did precious little to help the victims, then simply disappeared. Finally, after much thought, he told his friends their best bet was the Prime Minister's National Relief Fund.

Says former prime minister Inder Kumar Gujral: "The management of the PM's National Relief Fund is above board. The fund is regularly audited and its credibility cannot be doubted. Till today, I have not heard of anyone complaining about the way it is run."

Soon after Partition, scores of Indians sent money to then prime minister Jawaharlal Nehru. It was their way to help the nation tide over the difficult time. Nehru opened an account at the Janpath branch of the Central Bank of India and called it the Prime Minister's National Relief Fund.

Since this was not a government fund -- it is funded entirely by donations -- a private auditor was appointed. The fund, it was decided, would provide immediate relief to people in distress, particularly those affected by natural calamity. Senior officers at the Prime Minister's Office look after the operations of the fund on a day-to-day basis.

After the super-cyclone that devastated coastal Orissa in October 1999, more than Rs 1,000 million flowed into the Prime Minister's Relief Fund. Post the killer quake that struck Gujarat on January 26, Prime Minister Atal Bihari Vajpayee appealed to the nation: "We cannot leave the people of Gujarat to the mercy of fate or the cruelty of the vagaries of nature. They all need our help to tide over the calamity that has fallen upon them, to survive, to rebuild their lives."

In the days that followed, Rs 2,300 million flowed into the fund in the form of cheques, drafts and cash. Within 24 hours of the quake, the PMO dispatched Rs 100 million to the Gujarat government as immediate relief. They also sent Rs 50 million to the army, which would be used to help survivors and their families.

In the days that followed, Rs 650 million was dispatched to the state government. More money will be allocated, depending on the state government's requests and the assessment of various projects that NGOs are preparing for the quake-affected areas.

The well-known Self-Employed Women's Association has been short listed for a grant from the fund to help its artisan members. The Voluntary Health Association's projects in Gujarat are also being considered by the PMO; the VHA did excellent work rehabilitating fishermen in Orissa.

A major project that will be funded by the fund is a hospital with over 400 beds in Bhuj, exactly where the district hospital once stood. It will cost around Rs 700 million.

Remembers a PMO official: "An aged man walked in and gave us one month's pension. He was from the lower middle class and did not want his name advertised. There have been scores of anonymous callers since the quake. Some school children gave contributions from their pocket money. It feels great to see such faith and spirit."

Faith is the word.

Two individuals, who sent in cheques after the quake, wrote in, demanding that it be returned. They were doubtful if the money would be properly utilised and reach the victims. The PMO promptly returned the money.

There are many who send in their wills to the PM's fund, gifting their entire wealth and property. Often, their relatives contest these wills. The PMO does not contest this; officials say they do not want to get into controversy.

During the Kargil war, an 84-year-old man gifted his deceased wife's jewellery, all his property and wealth to the PM's fund. Vajpayee was so touched that he met the donor personally.

Numerous children then parceled their piggy banks to the fund.

After the Gujarat quake, banks like the Central Bank of India, State Bank of India, Syndicate Bank and other nationalised banks were authorised to collect money on behalf of the fund.

Every week, the banks send in a bunch of cheques, to be processed at the PMO. Receipts are then sent to individual donors.

An official at the PMO admitted it has taken time to send donor receipts after the quake as the response has been overwhelming, the paperwork enormous. Postmen were drafted to open the envelopes as the PMO staff found it impossible to handle the mail that poured in by the hour.

Soon after the quake, the PMO got an average of around 5,000 cheques daily, with amounts ranging from a hundred rupees to millions. In the last two months, the PMO has got over 50,000 cheques and drafts.

All contributions to the fund are exempt from income tax. Other funds only offer 50 per cent tax exemption.

Kargil brought in Rs 5,000 million to the fund. It was the highest-ever collection since Independence. But the war was a special reason.

Television pictures of wounded soldiers, Bofors guns booming on India's borders, coffins coming home and other horrific images brought the war into the living rooms of India. The cheques came in hordes. The entire collection was given to the National Defence Fund.

The contributions were used to treat the wounded, pay compensation to the families of those killed and rehabilitate maimed soldiers. Some funds were used to help jawans injured in other operations and relocate residents of border villages affected by the conflict.

How does the PMO ensure that the funds given to a state are properly utilised?

The PMO relies on an utilisation certificate of the funds from the state government. In the case of NGOs, it asks for periodic reports of how the funds have been used and whether the goals have been achieved.

The fund is at the sole discretion of the prime minister who can also give money to deserving individuals. It could be an aged artist who lives in penury and cannot pay his hospital bills; it could be a villager who needs life saving drugs or an operation. This is decided on basis of an application asking for financial help.

The applications are processed by the PMO; then amounts ranging between Rs 20,000 and Rs 30,000 are granted. The PM can, of course, grant more than these amounts in special cases. This is usually granted to very poor people who have to furnish their income certificate with the application.

For the first time, the government allowed 100 per cent tax relief to all contributions made to any organisation working for the quake victims. The only condition: that the money be spent by September 2001 and the expense accounts submitted by 2002.

This was fine in spirit.

"But it has created all kinds of audit problems for the income tax authorities," says Gupta. "Anybody," he said, "can create a fund or trust claiming to work for the Gujarat victims. Thousands of such funds and organisations are now around. It will be impossible for the income tax authorities to monitor what happened to the money, and if it was spent for the purpose it was collected."

Adds Gupta: "Scores of individuals, television channels, newspapers, NGOs and unknown organisations collected money for the quake victims. All of them may have glorious intentions, but it is difficult for any donor to figure out who the good ones are, who are sincere. Even if a minor abuse takes place, the whole spirit will be lost."

The income tax authorities have found cases of individuals who set up various trusts under different names and addresses. Points out Gupta: "When such a calamity strikes and thousands of trusts and individuals handle relief money, it becomes impossible to check every detail. There are enough cases of abuse in the income tax records."

As such doubts persist, the Gujarat high court recently passed orders that any district judge can now act as an ombudsman to receive complaints about misuse of relief supplies or money. The court was acting on a public interest litigation filed by former Gujarat high court chief justice B J Dewan and activist Kartikeya Sarabhai.

In many ways, it was a landmark judgment, making the government accountable. The court said the state government should submit all accounts relating to quake relief.

With his ringside view as an income tax officer, Gupta says states often divert relief funds to other projects.

Points out Mihir Bhatt, director, Disaster Mitigation Institute in Ahmedabad: "Most state governments use relief money to pay salaries. That is why they cannot quickly respond to a calamity. Later, CAG reports detail the misuse, but since the report comes long after the disaster, it is too late."

Vasu Malepati, a doctor from Pittsburgh, was in Bhuj recently to help the injured. He came with four suitcases of medicines. One of his patients had given him a box of sweaters and $ 5,000. But he decided he would not give this to any organisation, but would personally ensure that each dollar worth of material reached the needy.

His wife Durga, a pediatrician, wanted to come to Bhuj with him, but could not. So she asked him to spend the money that would be spent on her ticket on the relief operations. Said Dr Malepati: "I want to carefully choose where to spend the money. I will set up something with it and not give any contributions in cash." There is good reason for Dr Malepati not to do so. He recently gave money to start a library for a school in Andhra Pradesh. The library never came up.

Nobody knows how much money has come to Gujarat.

There is a need for transparency.

The people's trust need to be restored, and the only way to do this is to be completely transparent, says Gupta.

The Prime Minister's Relief Fund can be located at

Design: Dominic Xavier

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