Case Study 1

Rajesh Kumar is a senior public servant, with a reputation of honesty and forthrightness,
currently posted in the Finance Ministry as Head of the Budget Division. His department is
presently busy organising the budgetary support to the states, four of which are due to go to
the polls within the financial year. This year’s annual budget had allotted 78300 crores for the
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. 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 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 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 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:
1. Ethical issues involved in re-appropriation of funds from a welfare project to the
developmental projects.
2. Given the need for proper utilization of public funds, discuss the options available to
Rajesh Kumar. Is resigning a worthy option?

ANSWER:
A. Ethical issues involved in re-appropriation of funds

 Economic Development vs. Social Justice:

o As setting up a Special Economic Zone and natural gas processing plant,

economic development would help in the region’s economic growth and
eventually lead to the overall development of society & people.
  Further, finances’ non-availability would cause a financial loss in the
SEZ and national embarrassment due to delayed payment in an
international project.
o Social justice, as re-appropriation may cause inordinate delay in the execution
of the National Housing Scheme and may hamper the welfare of vulnerable
sections of the society.
 Empathy vs. Professional Duty:

o As a senior public servant, Rajesh Kumar’s responsibility is to exhibit

empathy and compassion for society’s downtrodden section’s upliftment and
welfare.

 Moreover, as the situation is politically sensitive, the diversion of

funds from the NHS could raise difficult questions for the government
in the Parliament.
o Further, Rajesh Kumar is the head of the Budget Division in the Finance
Ministry. Thus, his primary responsibility is to act with an objective analysis
of demand without getting influenced by the political situation.

Ethical Issues in Re-appropriation

The relevant ethical principle involved in the proposal for re-appropriation of funds from a
welfare scheme of NHS to the developmental projects is ‘Loyalty to Society’ which requires
one to ensure ‘Public Interest’ and ‘Fairness and Justice’ in governance. Both – NHS and the
Developmental Projects – satisfy the criterion of ‘Public Interest’ but the re-appropriation is
unfair to the poor beneficiaries of NHS as they would be deprived of their rightful
entitlement. Therefore, the reappropriation should not be done. Options Available to Rajesh
Kumar He has two broad options (unethical and ethical): Either to agree to the
reappropriation proposal or oppose it but suggest a way out. The first option is unethical
being against the principle of ‘Loyalty to Society’ as well as the principle of ‘Loyalty to
Profession’ which requires Rajesh Kumar to follow the rules of profession/governance:

 Re-appropriation is permitted within a grant. As NHS grant is different from the grants of
Ministries of Commerce & PNG, the Finance Ministry has no power of re-appropriation.

 Even within a grant, re-appropriation to a new service or item is not permitted. However,
Rajesh Kumar needn’t have to consider resigning as other alternatives to provide funds for
the developmental projects are available:

 Contingency Fund of Government of India has a balance of Rs 8,000 crore. Rajesh can
propose to draw money from this fund and re-coup it later after the sanction by the
Parliament.

 The concerned ministries’ PSUs may be asked to borrow from a nationalised bank upon the
guarantee by the Government of India till the budgetary allocations are approved by the
Parliament. Rajesh Kumar, in his submission, should argue against the re-appropriation
proposal and suggest the above alternatives to address the issue
 B.

Possible
Merits Demerits
Actions
1 Diversion of  It will help in boosting  It may cause inordinate delay in the
Entire exports and help increase execution of the NHS and may have
Amount for clean energy accessibility. tremendous implications for the poorer
Re- sections of the society.
appropriation  It will aid the government’s
objective of focusing on  The opposition may disrupt the parliament
economic development and and launch an agitation.
eventually lead to a trickle-  Diversion of Funds from welfare schemes
down of benefits to society. to economic projects may become a
regular practice.

2 Reject the  It will uphold the principle  Non-availability of finances would cause a
proposal for of social justice and the financial loss in the SEZ and may bring
the re- government’s commitment national embarrassment due to delayed
appropriation to helping the poorer section payment in an international project.
of funds. of society.
 As the gas grid is an essential component
 It will also save Rajesh of the national energy security strategy, it
Kumar from the wrath of the would have implications on energy
political masters, as populist availability and subsequent employment
demands majorly influence generation that the project would have
their decisions. provided.

3 Partial re-  It will help in balancing the  Partial re-appropriation of funds will
appropriation twin goals of economic require time for calculating the modalities
of Funds development and social and how much funds are to be transferred.
justice.
 On the contrary, due to the politically
sensitive situation, funds’ re-appropriation
needs to be processed immediately.

Conclusion: The Final Course of Action

 Rs. 78300 crores are sanctioned for the National Housing Scheme (NHS), out of
which only Rs 775 crores are spent. This means, almost the entire amount is
unutilized. Even if 6000 crores (what is asked) for these two developments is re-
appropriated, it will leave nearly 90% of the amount sanctioned for NHS.
 However, diversion of funds may become a slippery slope for the government to
divert welfare scheme funds under the guise of economic development.
 Thus, given the long-term implications of SEZ and the associated issue of national
embarrassment (if delayed), Rajesh Kumar should recommend re-appropriating funds
for SEZ projects only as an exceptional measure.
  Further, he should recommend that the gas project mobilize funds from the market,
which may form bonds.
 Lastly, the consideration of resigning as an option is not at all a good idea. Resigning
may reflect the escapist mindset and may set a bad example for other fellow civil
servants.
 Also, being a public servant, it is natural to such issues. It is also both the duty and
moral responsibility to act in public service, following objective standards and
without being influenced by vindictive politics.

Case Study 2

An apparel manufacturing company having a large number of women employees was losing
sales due to various factors. The company hired a reputed marketing executive, who
increased the volume of sales within a short span of time. However, some unconfirmed
reports came up regarding his indulgence in sexual harassment at the workplace. After some
time, a woman employee launched a formal complaint to the management against the
marketing executive about sexually harassing her. Faced with the companies’ indifference, in
not taking cognizance of her grievances, she lodged an FIR with the police. Realizing the
sensitivity and gravity of the situation, the company called the woman employee to negotiate.
In that, she was offered a hefty sum of money to withdraw the complaint and the FIR and
also give in writing that the marketing executive is not involved in the case.
1. Identify the ethical issues involved in this case.
2. What options are available to the woman employee?

ANSWER:
Sexual harassment is one of the serious issues plaguing our society especially working
women. The issue needs serious attention so as to make gender equality a major part of our
work culture. Considering the gravity of the situation, strong steps are needed to be taken.

Facts of the case are

 Alleged sexual harassment at the workplace by the marketing executive.

 The marketing executive is an important resource for the company as he increased
sales in a short period of time.
 Company management’s indifference is not taking cognizance of the woman’s
complaint.
 Company pressurizing the woman employee to withdraw the case.

Ethical issues involved in the case are:

 For Woman employee:

 o Handling mental agony and societal pressure in pursuing the case.
o Loss of self-respect in negotiating with the company for monetary benefits.
 Marketing executive:
o Saving professional life by negotiating with the woman employee and proving
innocence if not guilty.
 Company management:
o Insensitivity towards the dignity of a woman.
o Priority to profit over organizational values by indulging in illegitimate
negotiation with the woman employee.
 Other employees
o To continue working with the marketing executive against the moral
conscience of other women employees.

Following options are available to the woman employee:

 Continue with her case by taking a firm stand against the company management.
o This would give her a fair chance to prove her viewpoint in a court of law and
will give her mental peace that she stood for herself.
o However, she will have to face mental agony and societal pressure in
pursuing the case and may even prove detrimental for her career prospects.
 Accept the negotiation offer by the company and withdraw the case.
o This may be beneficial for her career and will save her from the rigorous
investigation process.
o However, this would create dissonance and affect mental peace as her
conscience would not allow her to accept monetary gains over self-respect.
Also, she would never be able to stand for herself in the future.
 Resign from the company and focus on other career opportunities.
o This will let her avoid the situation and will be beneficial for her career
prospects.
o However, the scars of sexual harassment will remain with her throughout her
life and she will regret that she herself is responsible for the denial of justice to
her.

The correct course of action

 Option (1) seems to be the correct way of handling the situation. The women
employee can play a leadership role. Her actions will give voice to other genuine
concerns of women employees. It is her moral responsibility to come forward and
show exemplary behaviour. This will not only bring self-satisfaction to her but also
increase her confidence and inner strength.
 Also, there is a major fault of company management in giving priority to profit
motives by saving the marketing executive and not forming the internal complaints
committee as mandated by the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. 

Gandhiji considered ‘commerce without morality’ as one of the seven social sins. Thus, it is
not only an individual’s fault, but an organization’s which lack values such as respect for the
dignity of woman, work-culture ethics, and gender equality.
Ethical issues involved

 Integrity
The issue is not only about the allegations its about the idea called equality and
beliefs. By accepting the offer, you not only betray your inner self-respect but also
the cause you stood up for. It will violate all the values that built your character.
 Whistleblowing
Organisational integrity is one of the basic requirements of an employee but if its
comes at the cost of crime then its needs violation. The whistleblowing can spoil
the image of the company and can create losses. But the bigger issue needs to be
highlighted.
 Human rights
Every person has a right to work in a safe working environment without being
harassed or discriminated. By taking back the FIR you will be making other
colleagues vulnerable to the sexual predator.
Measures that can be taken

 Considering importance of the company, an internal enquiry can be initiated and if

the person is found to be guilty then action can be taken according to the rules and
regulations of the company.
 If the company is bent upon having the person aboard then you need to take strong
actions from preventing his continuation in the company.
 If the company is not interested in supporting your cause and are pressurising you
to withdraw then you will have to take help from sources other than law such as
women’s commission or media.
 But the main thing that needs to be noted is that accepting the money to keep mum
is absolutely unethical and can be considered a grave offence.
 If such an individual continues in the company, then other women will be
vulnerable too. So, your steps will have implications on future of all other women
employees.
 If there is lack of proof for proving the charges then methods like Sting can be
used to bring the real face of the culprit in front of the society. But the company is
likely to suffer in all these issues.
Thus, Sexual harassment is a problem that needs to be punished and any compromise in this
issue cannot be accepted. The organisation must provide its help to ensure justice is delivered
to the victim.