This year’s annual budget had allotted ₹8300 crores for National Housing Scheme (NHS), a centrally sponsored social housing scheme for the weaker sections of society. ₹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 discussions 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 required 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 ₹6000 crores for these two developmental projects. It was decided to recommend re-appropriation of this entire amount from the NHS allocation. The file was forwarded to 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 an international project.
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 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?
Approach · directive: “discuss”
What it asks · (a) Name the ethical issues in shifting funds from a welfare scheme for the weaker sections to commercial and strategic projects; (b) weigh Rajesh Kumar's options, including whether resigning is worthwhile.
The question has 3 parts — answer each
- (a) Discuss the ethical issues in re-appropriating funds from a welfare project to developmental projects
- (b) Discuss the options available to Rajesh Kumar, given the need for proper utilisation of public funds
- (b) Judge whether resigning is a worthy option
Open with · Public money is held in trust; how it moves between housing for the poor and export and energy projects tests fairness, legality and accountability.
Cover
- Stakeholders: the housing scheme's beneficiaries, the SEZ and gas-project interests, Parliament, the Finance Ministry and seniors, taxpayers, and Rajesh Kumar.
- Ethical issues: priority to the weaker sections versus economic and energy security, propriety of shifting funds, transparency to Parliament, political pressure, and public trust.
- Facts to weigh: only ₹775 crore of ₹8,300 crore has been drawn, and the SEZ land process and December payment need money at different times.
- Option 1, re-appropriate the full amount as proposed: meets both commitments but risks delaying NHS, invites criticism in Parliament, and may exceed what executive re-appropriation allows.
- Option 2, phase it: shift only what the projects need now, protect NHS's committed spending, and cover the rest by savings or supplementary demands.
- Option 3, record and escalate: a reasoned note on risks, the legal position and alternatives such as savings, supplementary demands or a Contingency Fund advance.
- Resigning: not worthy here, as it fixes nothing and leaves the decision to others; a last resort only if forced to act illegally.
Close with · Dissent on record with facts and alternatives rather than walk away: protect the weaker sections' claim, meet real commitments, and let the competent authority and Parliament decide.
Add value (verified)
- The General Financial Rules allow re-appropriation only between primary units within the same grant or appropriation, so moving money from one ministry's welfare scheme to another ministry's projects is not an executive re-appropriation and needs Parliament's sanction. General Financial Rules 2017 (updated compilation), rule on Re-appropriation of Funds, hosted by DGMA, Ministry of Defence ↗“re-appropriation of funds from one primary unit of appropriation to another such unit within a grant or appropriation, may be sanctioned by a competent authority at any time before the close of the financial year to which such grant or appropriation relates”
- Rawls's second principle of justice: social and economic inequalities must be to the greatest benefit of the least-advantaged members of society (the difference principle). John Rawls — Stanford Encyclopedia of Philosophy ↗“They are to be to the greatest benefit of the least-advantaged members of society (the difference principle ) ( JF , 42–43).”
- Rule 3(1)(x) and (xii) of the CCS (Conduct) Rules, 1964: responsiveness to the public, particularly the weaker section, and efficient, effective and economical use of public resources. Central Civil Services (Conduct) Rules, 1964, Rule 3(1), updated to 27 February 2015 — DoPT ↗“(x) maintain responsiveness to the public, particularly to the weaker section; (xi) maintain courtesy and good behaviour with the public; (xii) take decisions solely in public interest and use or cause to use public resources efficiently, effectively and economically;”
- Article 267: the Contingency Fund of India allows advances for unforeseen expenditure pending Parliament's authorisation under Article 115 (supplementary grants) or Article 116. The Constitution of India — Legislative Department, Ministry of Law and Justice (2024 text) ↗“the said Fund shall be placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by Parliament by law under article 115 or article 116.”
- T.S.R. Subramanian v Union of India (Supreme Court, 31 October 2013): civil servants cannot act on oral instructions and must be protected against arbitrary pressure from superiors, the political executive and business. T.S.R. Subramanian & Ors vs Union of India & Ors, Supreme Court, 31 October 2013 — Indian Kanoon ↗“We are of the view that the civil servants cannot function on the basis of verbal or oral instructions, orders, suggestions, proposals, etc. and they must also be protected against wrongful and arbitrary pressure exerted by the administrative superiors, political executive, business and other vested interests.”
Question: UPSC's CS (Main) 2020, GS Paper IV — paper ↗. Approach: Minimalist IAS, checked 1 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 378 words (UPSC limit 250) · Minimalist IAS
The General Financial Rules allow re-appropriation only between units within the same grant. Moving ₹6,000 crore from housing for the weaker sections to an SEZ and a gas plant therefore tests legality as much as fairness.
Stakeholders
- NHS beneficiaries; SEZ exporters; the PSU and the MNC; Parliament and taxpayers; seniors and Rajesh Kumar.
(a) Ethical issues in re-appropriating welfare funds to development projects
- Distributive justice: the poorest lose homes so that commercial and strategic projects gain. Rawls's difference principle asks that inequalities work "to the greatest benefit of the least-advantaged members of society".
- Legality: NHS sits in another ministry's grant, and slow drawal by June is not a saving; the shift needs Parliament, not a file note.
- Accountability: a scheme publicised in rallies would be quietly emptied, dodging Parliament.
- Conflict of duties: an international payment and energy security against a welfare promise, and political urgency against due process.
- The officer's code: the CCS (Conduct) Rules, the standard for central government servants, demand responsiveness "particularly to the weaker section" and use of public resources "efficiently, effectively and economically".
(b) Options before Rajesh Kumar
| Option | Merit | Demerit |
|---|---|---|
| Process the full diversion | Fast; meets both deadlines | Beyond the rules; hurts the poor |
| Resign | Clean hands | Fixes nothing; file passes to a pliant officer |
| Reasoned note with alternatives | Lawful, fair, timely | Needs courage; may annoy seniors |
- The alternatives: fund the December payment and the SEZ's immediate need in phases; meet urgency by an advance from the Contingency Fund (Article 267), regularised by a supplementary grant under Article 115; protect NHS's committed spending.
- Put pressure on record: in T.S.R. Subramanian (2013) the Supreme Court held that civil servants "cannot function on the basis of verbal or oral instructions"; seniors' urgency belongs on file.
Is resigning a worthy option?
- Not here. Resignation is the last resort against an order to act illegally; a disagreement calls for recorded dissent: fearless advice first, then loyal implementation of a lawful decision.
Systemic fix
- Realistic phasing of large projects, early supplementary demands, and no unrecorded raids on welfare allocations.
Rajesh Kumar serves the poor, the nation's commitments and Parliament best by staying and dissenting on record. The money can move, but only lawfully and openly, so that the least advantaged are not the first to pay for growth.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.