← All questionsGS4 · 2020 · Case Studies — Public Sector ·Rajesh Kumar and Diverting Housing Funds (Case)
QUESTION 7
GS4
20 marks

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. 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 an inordinate delay in the execution of NHS, a project much publicized in the rallies of senior politicians. Correspondingly, the non-availability of finances would cause a 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 developmental projects.(b) Given the need for proper utilization of public funds, discuss the options available to Rajesh Kumar. Is resigning a worthy option?"

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14 min
250 words

What the examiner wants

Rajesh must process diversion of ₹6,000 crore from a housing scheme for the poor to an SEZ and gas plant. Examine issues and options; is resigning worthy?

Case studyName the stakeholders and the issues, weigh the options, and say what you would do and why.

Demand-wise check

  1. 1(a) Issues: welfare of weaker sections vs economic growth, legality of re-appropriation, transparency to Parliament, intergenerational benefit≈65 words
  2. 2(b) Options: approve as is; reject; approve partially with timeline to restore housing funds; seek supplementary grants; record dissent≈65 words
  3. 3Resigning: not worthy, as it abandons responsibility; better to give honest advice in writing and let the elected government decide≈65 words

Open in about 30 words and close in about 30.

Answer plan

Facts(a) issues(b) options with evaluationResignation questionConclusion

Where marks usually go

  • Saying resignation is the best option
  • Ignoring parliamentary approval rules

Draw this

  • Option table: legality, welfare, growth

Value addition

  • RuleRe-appropriation between schemes needs approval and cannot create new services without Parliament's sanction (GFR and Delegation of Financial Powers Rules).General Financial Rules 2017
  • LawArticle 115 provides for supplementary grants when funds are insufficient.Constitution of India

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