Public Fund
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India
is an emerging economic power of the world as it has recently secured the
status of fourth largest economy of the world as per IMF projection. However,
it has been observed that in some sectors, allocated funds remain either
under-utilised or misutilised. What specific measures would you recommend for ensuring accountability in this
regard to stop leakages and gaining the status of third largest economy of the
world in near future? 2025
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 the budgetary support to the states, four of which are due to the
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
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 center and state,
the Union Cabinet approved the project in August. The 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.
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
development 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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