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.
It asks 3 things — 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 · Housing for the weakest versus export and energy commitments; political urgency versus Parliament's control of the purse.
Cover
- Stakeholders: NHS beneficiaries, SEZ exporters, the PSU and the MNC, Parliament and taxpayers, seniors and Rajesh Kumar.
- (a) Issues as value conflicts: justice for the poorest (Rawls's difference principle) versus growth; legality under the GFR versus expediency; transparency versus convenience.
- (a) The officer's code: the CCS (Conduct) Rules on responsiveness to the weaker section and efficient, economical use of public resources.
- (b) Options weighed in a table: process the full diversion, send a reasoned note with lawful alternatives, or resign.
- (b) Course: a note on file; phased funding; a Contingency Fund advance (Article 267) regularised by a supplementary grant (Article 115).
- (b) Pressure goes on file (T.S.R. Subramanian); resigning is a last resort against an illegal order, and Patel wanted secretaries who write dissenting notes.
- Long-term: realistic phasing of projects, early supplementary demands, and no unrecorded raids on welfare allocations.
Close with · Stay and dissent on record: money may move, but only lawfully and openly, so that the least advantaged are not the first to pay for growth.
Add value (verified)
- The General Financial Rules allow a competent authority to sanction re-appropriation of funds from one primary unit of appropriation to another only within a grant or appropriation, at any time before the financial year closes.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.”
- Sardar Patel in the Constituent Assembly (10 October 1949): his Secretary could write a note opposed to his views, and he would never be displeased over a frank expression of opinion.Constituent Assembly Debates, 10 October 1949, Sardar Vallabhbhai Patel on the services (debates text as hosted by constitutionofindia.net) ↗“Today my Secretary can write a note opposed to my views. I have given that freedom, to all my Secretaries. I have told them, “If you do not give your honest opinion for fear that it will displease your Minister, please then you had better go. I will bring another Secretary,” I will never be displeased over a frank expression of opinion.”
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· 375words · Minimalist IAS
Housing for the weakest versus export and energy commitments; political urgency versus Parliament's control of the purse.
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
- Justice versus growth: the poorest lose homes so that commercial projects gain; Rawls's difference principle wants inequalities to work "to the greatest benefit of the least-advantaged members of society".
- Legality versus expediency: the General Financial Rules allow re-appropriation only within a grant; NHS likely sits in another ministry's grant, and slow drawal is not a saving.
- Transparency versus convenience: a scheme publicised in rallies would be quietly emptied, dodging Parliament.
- Duty versus duty: an international payment and energy security against a promise to the poor.
- The officer's code: the CCS or AIS (Conduct) Rules demand responsiveness "particularly to the weaker section" and use of public resources "efficiently, effectively and economically".
(b) Options before Rajesh Kumar
| Option | Merits | Demerits |
|---|---|---|
| Process the full diversion | Fast; meets both deadlines | Beyond the rules; hurts the poor |
| Reasoned note with lawful alternatives | Lawful, fair, timely | Needs courage; may annoy seniors |
| Resign | Clean hands | Fixes nothing; file passes to a pliant officer |
- His course: a note on file on the legal limit, NHS's committed spending and the cost of delay; seniors' oral urgency belongs on file, for in T.S.R. Subramanian (2013) the Supreme Court held that civil servants "cannot function on the basis of verbal or oral instructions".
- Lawful alternatives: fund the December payment and the SEZ's immediate need in phases; meet urgency by a Contingency Fund advance (Article 267), regularised by a supplementary grant under Article 115.
(b) Is resigning a worthy option?
- Not here: resignation is the last resort against an illegal order. Sardar Patel told the Constituent Assembly (1949) that his Secretary could "write a note opposed to my views": frank advice on file, then loyal implementation of a lawful decision, not exit.
Long-term fix
- Realistic phasing of large projects, early supplementary demands, and no unrecorded raids on welfare allocations.
Staying and dissenting on record serves the poor, the nation's commitments and Parliament: money may move, but only lawfully and openly, so that the least advantaged are not the first to pay for growth.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 1 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
