The UPSC (Union Public Service Commission) examination is renowned as one of the most prestigious and challenging competitive exams in India. In the year 2020, the General Studies Paper 4, often referred to as GS 4, presented candidates with a diverse array of ethical dilemmas and situational questions. This paper aimed to evaluate the ethical and moral aptitude of aspiring civil servants, testing their ability to navigate complex issues with integrity and sound judgment. Through a series of case studies and theoretical inquiries, candidates were required to demonstrate their understanding of ethical principles and their practical application in governance and public administration. The UPSC GS 4 paper serves as a crucial benchmark for selecting individuals who possess not only the knowledge but also the ethical fortitude necessary to serve the nation with honesty, fairness, and dedication.
Q7. Rajesh Kumar is a senior public servant, with a reputation of honesty and forthrightness, currently posted in the Finance Ministry as the Head of the Budget Division. His department is presently busy in organizing budgetary support to the states, four of which are due to polls within the financial year.
This year’s annual budget had allotted Rs 8300 crores for the National Housing Scheme (NHS), a centrally sponsored social housing scheme for the weaker sections of society. Rs 775 crores have been drawn for the NHS till June.
The Ministry of Commerce had long been pursuing a case for setting up a Special Economic Zone (SEZ) in a southern state to boost exports. After two years of detailed discussion between the centre and state, the Union Cabinet approved the project in August. Process was initiated to acquire the necessary land.
Eighteen months ago a leading Public Sector Unit (PSU) had projected the need for setting up a large natural gas processing plant in a northern state for the regional gas grid. The land is already in possession of the PSU. The gas grid is an essential component of the national energy security strategy. After three rounds of global bidding the project was allotted to an MNC, M/S XYZ Hydrocarbons. The first tranche of payment to the MNC is scheduled to be made in December.
The Finance Ministry was asked for a timely allocation of an additional Rs 6000 crores for these two developmental projects. It was decided to recommend re-appropriation of this entire amount from NHS allocation. The file was forwarded to the Budget Department for their comments and further processing. On studying the case file, Rajesh Kumar realized that this re-appropriation may cause inordinate delay in the execution of NHS, a project much publicized in the rallies of senior politicians. Correspondingly, non-availability of finances would cause financial loss in the SEZ and national embarrassment due to delayed payment in the international project.
Rajesh Kumar discussed the matter with seniors. He was conveyed that this politically sensitive situation needs to be processed immediately. Rajesh Kumar realized that diversion of funds from the NHS could raise difficult questions for the government in the Parliament.
Discuss the following with reference to this case:
(a) Ethical issues involved in re-appropriation of funds from a welfare project to the development projects.
Tag: Case Studies.
Rajesh Kumar, Head of Budget Division in the Finance Ministry, Known for his honesty and forthrightness. The main issues of concern before him are:
- Budget allocated for the NHS scheme is Rs. 8300 cr of which 775 cr is drawn already in June, now left with Rs. 7525 cr.
- In August, the Union Cabinet approved a project to set up SEZ by the Ministry of Commerce to increase exports, and the process for land acquisition began.
- PSU to set up a natural gas processing plant after global bidding allot the project to MNC, M/S XYZ, for which the first tranche of payment to MNC to be made in December.
- The Finance Ministry was asked for a timely allocation of an additional Rs. 6000 Cr for these two development projects. It was decided to recommend re-appropriation of this entire amount from allocation.
Rajesh Kumar discussed the matter with his seniors. He was conveyed that this politically sensitive situation needs to be processed immediately. Rajesh Kumar realized that diversion of funds from the NHS could raise difficult questions for the government in the Parliament.
Stakeholders in the case:
- Beneficiaries of National Housing Scheme (NHS).
- Public Sector Unit for Natural gas processing plant
- MNC M/S XYZ Hydrocarbons
- Southern State where SEZ to be set up.
- Senior bureaucrats and Politicians of different Ministries.
- Society at large.
Ethical Issues Involved in re-appropriation of funds from a welfare project to the development projects:
Economic Development vs Social Justice:
- By setting up a Special Economic Zone and natural gas processing plant, economic development would help in the region’s economic growth and eventually lead to the overall development of society and people.
- However, finances’ non-availability would cause a financial loss in the SEZ and national embarrassment due to delayed payment in an international project.
- Social justice, as re-appropriation may cause undue delay in the execution of the National Housing Scheme and may hamper the welfare of vulnerable sections of the society.
Empathy vs Professional Duty:
- As a senior public servant, Rajesh Kumar’s responsibility is to exhibit empathy and compassion for society’s downtrodden section’s upliftment and welfare.
- Further, Rajesh Kumar is the head of the Budget Division in the Finance Ministry. Thus, his primary responsibility is to act with an objective analysis of demand without getting influenced by the political situation.
- Rights based Approach Vs administrative discretion: Though the Ministry of Finance has given administrative discretion to allocate 6000 cr rupees or go for reappropriation but again the ethical dilemma will arise when administrative discretion is used as it will be against the right of the people (having the right to have basic amenity of housing).
- Policy dilemma to prioritize welfare or Development: This is also an ethical issue or ethical dilemma as we need to prioritize between welfare schemes or development.
Thus, given the long-term implications of SEZ and the associated issue of national embarrassment (if delayed), Rajesh Kumar should recommend re-appropriating funds for SEZ projects only as an exceptional measure.He shall recommend that money for gas projects can be mobilized through market bonds. Further, the firms engaged in SEZ and gas projects can be asked to fund housing projects under Corporate Social Responsibility.
Given the need for proper utilization of public funds, the options available to Rajesh Kumar are:
- Resigning from Job: This will ensure an easier way out to the problem encountering Rajesh Kumar. But again, it would be akin to the escapist tendency where Rajesh Kumar could be seen as running away from responsibility. An honest and forthright public servant is expected to handle the situation to the best of their capabilities and take decisions as per their merit. Hence, this option would be least preferable.
- Divert the Fund: This will ensure that both SEZ projects and Natural Gas processing plants would have sufficient funds to initiate their process. However, after re-appropriation or diversion of funds demanded, i.e. 600 cr. only 1525 cr would be left for the NHS, which is why it is insufficient for its implementation. It was observed that poor and marginalized are often overlooked in the development process and this action would strengthen this view point. Hence, this option too is not preferable.
- Do not Divert the Fund: By not diverting the fund, the NHS would be implemented in the way it was planned and the poor would get their own housing accommodation. It also serves the government face in parliament. However, it will lead to default in payment to M/S XYZ for Natural gas processing plants that would det Country’s international reputation. Likewise, the SEZ Project land acquisition process would further get delayed. Hence, this option too is not preferable.
- Balancing the Reappropriation of Fund: Here, the budget reappropriation is done in a way that payment of the first tranche to M/S XYZ is made on time along with some funds for SEZ Project to ensure its kick start. However, the majority of funds that was allocated for the NHS scheme should be there with a clause of release of funds in a phased manner with progress of Housing Construction to ensure houses for need one built on time.
In this case, the best course of action would be to balance the economic growth initiative under the SEZ and National Grid project with people’s rights and welfare. It could be done with the help of better resource and budget management during allocation based on outcome based budgeting principles. Hence, the 4th option would be the most appropriate option.
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