Major Government Relief Funds and Their Features

The Government of India operates several relief and response funds for disasters, emergencies, defence welfare, and medical hardship. Some are statutory funds created under law, while others are public charitable trusts managed by government functionaries.

Prime Minister’s National Relief Fund (PMNRF)

Origin and Evolving Objectives

• Establishment: The PMNRF was set up in January 1948 by Pandit Jawaharlal Nehru.
• Initial purpose: It was created to accept voluntary contributions for people displaced from Pakistan during Partition.
• Current mandate: It provides immediate assistance to families of persons killed in natural disasters such as floods, cyclones, and earthquakes, and also helps victims of major accidents and riots.
• Medical aid: It partially supports treatment for serious illnesses such as cancer, kidney transplants, heart surgeries, and acid attacks.

Financial Structure and Taxation

• Funding source: The PMNRF depends entirely on voluntary donations from individuals, companies, trusts, and institutions.
• Budget support: It does not receive any budgetary allocation from the government.
• Tax exemption: Donations qualify for 100% deduction under Section 80G of the Income Tax Act, 1961.
• Income tax status: The fund is exempt from income tax under Section 10(23C) of the Income Tax Act, 1961.
• CSR: Corporate contributions are treated as CSR expenditure under the Companies Act, 2013.

Governance and Audit

• Legal status: It functions as a public charitable trust and is not a statutory body.
• Administration: The Prime Minister is the chairperson, while PMO officials manage the fund on an honorary basis.
• Audit: Since it is outside the Consolidated Fund of India, the CAG does not audit it; an independent chartered accountant conducts the annual audit.

PM CARES Fund

Objectives and Scope

• Full form: Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund.
• Registration: It was registered as a public charitable trust on March 27, 2020, under the Registration Act, 1908.
• Core purpose: It was created to address emergency and distress situations, including the COVID-19 pandemic.
• Permitted activities: The fund supports relief work, health infrastructure, medical research, pharmaceutical capacity-building, and direct financial assistance to affected groups.

Administrative Framework

• Ex-officio trustees: The Prime Minister is the ex-officio Chairman, and the Union Ministers of Defence, Home Affairs, and Finance are ex-officio Trustees.
• Nominated trustees: The Chairperson may nominate up to three eminent experts from fields such as science, medicine, law, or philanthropy.
• Daily management: PMO officials manage the trust on an honorary basis.

Financing and Tax Exemptions

• Inflow of funds: The fund receives only voluntary contributions and no government budgetary allocation.
• Foreign donations: It has a dedicated FCRA registration and can accept foreign contributions.
• Tax status: Contributions are eligible for 100% deduction under Section 80G.
• CSR: Corporate contributions qualify as CSR expenditure.
• Audit: A privately appointed chartered accountant audits the fund; the CAG does not audit PM CARES.

Recent Context

The latest audited statements for FY 2023–24 and FY 2024–25 have been made public. The corpus rose to ₹8,452.07 crore by March 31, 2025, with most of it parked in fixed deposits.

National Defence Fund (NDF)

Core Purpose and Activities

• Origin: The government set up the National Defence Fund in 1962.
• Objective: It collects voluntary donations in cash and kind for national defence purposes and for the welfare of Armed Forces, Paramilitary Forces, and their dependents.
• Major initiative: It finances the Prime Minister’s Scholarship Scheme (PMSS) for technical and postgraduate education of widows and wards of deceased personnel from the armed forces, police forces, and paramilitary forces.

Executive Committee and Funding

• Governance committee: An executive committee administers the fund.
• Chairperson: The Prime Minister is the Chairperson.
• Members: The Ministers of Defence, Finance, and Home Affairs are members.
• Administrative officers: The Finance Minister acts as Treasurer, and a Joint Secretary in the PMO acts as Secretary of the Executive Committee.
• Accounts: The accounts are kept directly with the Reserve Bank of India.
• Tax benefit: The fund qualifies for 100% tax exemption under Section 80G.

National Disaster Response Fund (NDRF)

Statutory Foundation and Purpose

• Legal creation: Section 46 of the Disaster Management Act, 2005 establishes the NDRF.
• Replacement: It replaced the National Calamity Contingency Fund (NCCF) in September 2010.
• Objective: It finances immediate emergency response, rescue, and rehabilitation during severe notified disasters.
• Scope: It covers natural disasters such as cyclones, earthquakes, tsunamis, landslides, floods, and droughts, as well as severe man-made accidents.
• Use of funds: It supplements the State Disaster Response Fund in severe calamities and is meant for immediate relief, not compensation for property or crop loss.

Funding and Revenue Generation

• Main source: The fund is financed mainly through the National Calamity Contingency Duty on specified goods subject to excise and customs duties.
• Additional support: If relief needs exceed collections, the Union Government provides extra resources through budgetary allocations.
• Public contributions: Individuals and institutions may contribute directly, though this is rarely used.

Administration and Audit Control

• Financial category: The NDRF is placed in the Public Account of India under “Reserve Funds not bearing interest”.
• Decision-making body: The National Executive Committee of the NDMA decides expenditure.
• Audit: The CAG audits the accounts of the NDRF.

State Disaster Response Fund (SDRF)

Governance and Funding Split

• Legal basis: Section 48(1)(a) of the Disaster Management Act, 2005 establishes the SDRF.
• Primary role: It is the immediate fund available to state governments for notified disasters.
• Sharing pattern: The Centre contributes 75% for general category states and Union Territories, and 90% for North-Eastern and Himalayan states.
• Disbursement: The central share is released in two equal annual instalments based on Finance Commission recommendations.

Permitted Resource Allocation

• Notified disasters: It covers cyclones, droughts, earthquakes, fires, floods, tsunamis, landslides, avalanches, cloudbursts, pest attacks, cold waves, and frost.
• State-specific disasters: States may use up to 10% of their annual SDRF allocation for local disasters not included in the central list.

Disaster Mitigation Funds (NDMF and SDMF)

Key Characteristics

• Legal provisions: Section 47 of the Disaster Management Act, 2005 governs the National Disaster Mitigation Fund, and Section 48(1)(c) governs the State Disaster Mitigation Fund.
• Difference from response funds: NDRF and SDRF are for immediate relief, while mitigation funds are for long-term risk reduction, prevention, and hazard mitigation.
• Operations: These funds became active after the Fifteenth Finance Commission recommendations.
• Examples: They support cyclone shelters, embankments, and early warning systems.

Comparison of Primary Prime Minister-Led Trusts

Rare Facts for Prelims

• PMNRF is older than the Republic: It was created in 1948, before the Constitution came into force.
• PM CARES has FCRA registration: This makes it distinct from many domestic charitable trusts that cannot receive foreign contributions without such registration.
• NDRF is not a compensation fund: It is meant for immediate relief and response, not for full damage reimbursement.
• SDRF has a special state window: States can spend up to 10% on local disasters not listed as notified calamities.
• PMSS is linked to NDF: The National Defence Fund supports scholarships for dependents of deceased personnel.
• Mitigation funds are preventive: NDMF and SDMF focus on reducing future disaster risk, unlike response funds.