Total Questions : 1
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Case Study
Arvind Mehta, a senior public servant, currently heads the Budget Division in the Ministry of Finance. His division is presently involved in allocating budgetary support to various states, four of which are scheduled to hold assembly elections within the current financial year.
As per the latest Union Budget, more than Rs 8,300 crore was allocated to the National Housing Scheme (NHS), a key centrally sponsored welfare programme aimed at providing affordable housing to weaker sections. By June, Rs 775 crore had already been disbursed under the scheme.
Parallelly, the Ministry of Commerce had been pursuing the establishment of a Special Economic Zone (SEZ) in a southern state to promote exports. After nearly two years of consultation between the Centre and the state, the Union Cabinet gave its approval in August, and the process for acquiring land has since begun.
In another development, a Public Sector Undertaking (PSU) had proposed a natural gas processing plant in a northern state to support the regional gas grid, an essential element of the country's energy security strategy. The land for the project is already available, and after three rounds of global bidding, the contract was awarded to M/s XYZ Hydrocarbons, a multinational company. The first tranche of payment is scheduled for December.
To meet the funding requirements of these two major development projects, an additional Rs 6,000 crore is required. It has been proposed that this amount be re-appropriated from the NHS budget. The file seeking approval for this re-allocation was sent to the Budget Division for examination and processing.
On reviewing the file, Arvind Mehta became concerned. He realised that diverting funds from the NHS could delay its implementation, a scheme widely promoted by senior political figures and closely linked to electoral commitments. On the other hand, delaying fund allocation to the SEZ and the gas plant could lead to significant financial losses and reputational damage at both national and international levels. Upon raising the issue with his superiors, Arvind was advised that the matter is politically sensitive and must be expedited without delay.
Question:
a) Identify the ethical issues involved in reallocating funds from a welfare programme to development projects.
b) In light of the responsibility to ensure prudent use of public resources, what options are available to Arvind Mehta? Would resigning from his post be a reasonable or ethical course of action?
GS Paper 4 Case Studies
