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akhilesh yadav

Public Money and RTI



By Dr U B Chaubey in post.jagran.com on Nov 02, 2012

Public Money and RTI


Today’s economic world has become far more complex with the distinction between private and public sector getting blurred. Clear cases of private and public sector are becoming a rarity. There are a range of investors from public institutions to sovereign wealth funds in a large private sector company. Then there is also growing need for Public-Private Partnerships (PPPs) in infrastructure and socially relevant sectors. This transformation as well as growing incidences of corruption and misuse of public money calls for introducing relevant changes in the laws and regulations governing the industry sector. Since the public sector is already subject to public accountability and scrutiny, the same needs to be extended to the private sector. Besides promoting good governance ethics, public accountability would also ensure judicious use of public funds, thus bringing in efficiency and higher growth.

Good corporate governance ethics including transparency, credibility and due diligence are far more important today than ever before. Large sums of public money have been invested in corporate houses through stock markets. The apprehension of such vast public money being used for extravagant and conspicuous expenditures by the owners of private corporate houses is no longer unfounded. Also, it has been observed that corruption is not a function of ownership. Rather, it is common to both public and private sectors. This definitely makes a case for introducing not only strong checks and balances but also for accountability. Since the public sector is subject to CAG scrutiny, parliamentary accountability and Right to Information (RTI) Act, it makes strong case for extending public accountability and scrutiny to private sector as well. Besides promoting good governance, ethics, increased transparency and accountability would ensure judicious use of public funds thus enhancing productivity and efficiency and would benefit industry as well as economy.

Governments across the globe have been entering in a wide array of arrangements in private sector to utilize its capacities and resources in developing and operating some of the key facilities of public service and projects deem important for development of a country. For implementation of projects public money, assets, and critical functions are transferred to private sector/private hands for which privatization or Public Private Partnership (PPP) model is adopted. However, such a transfer needs proper checks and balances between costs and benefits as well as risks and opportunities between public and private partners lest it would result in failures and unmet social needs. Public regulations and accountability would still be relevant over unregulated privatizations and private profits, particularly in a developing country like India in order to make economic growth more inclusive and sustainable.

Further for successfully running a PPP project, mutual coordination and cooperation of various government agencies is very important. Also proper regulatory mechanisms and checks and balances are required for sustenance of the project. For long-term sustainability of a project or service, it is very important that good corporate governance practices are followed religiously. Transparent decisions based on ethical practices ensure that the interests of all the stakeholders are protected along with efficient use of resources that results in better products and higher profits. The need for higher investments through PPPs and rising public participation in equity issues make a strong case for proper checks and balances through RTI and public auditing such as CAG regulations must for non-government corporate sector.


At present, the RTI Act covers only the government sector, including public sector enterprises (PSEs), broadly based on the premise that the sector uses public money. RTI which was earlier looked at with skepticism for being a hurdle in strategic decision making has now become more acceptable for improving PSEs’ image and thus their functioning. Its role in strengthening corporate governance by promoting fairness, transparency, integrity and accountability are being appreciated. Corporate Decisions based on transparency and accountability and good ethics have become a hallmark of corporate governance all across the world. The public sector has always been subject to transparency and public accountability and RTI has helped it in becoming even more transparent and fair in its processes. High level of public accountability is helping the PSEs in achieving excellence in their fields of operations.

The concept of Corporate Social Responsibility (CSR) is closely linked to achieving sustainable and inclusive economic and social development. At the same time, CSR initiatives are a potent tool for goodwill and image building for corporates, thus increasing investors’ confidence in them. For this reason, CSR has become an integral part of corporate governance. The very basis of PSEs’ existence, namely, growth with equity and social justice conforms to the objectives of CSR. Public sector’s initiatives are in line with applicable rules and regulations and thus scope of wasteful expenditures and diversion of funds under CSR is negligible. However, now-a-days NGOs are involved in handling large public funds as agencies for carrying out social welfare programmes. These NGOs are not subject to either RTI or controlled through any statutory / regulatory norms and social audit. In such a case, it is of utmost importance to bring the privates sector and NGOs under public accountability and RTI. Similarly, social service providers, be it private sector undertaking investments under CSR or non-government organizations (NGOs) providing social service using large public funds, should also be brought under RTI.

Extension of the RTI Act would bring greater transparency and accountability and also foster greater responsibility towards public welfare. And in case RTI Act is extended to projects having public money it will not be unprecedented as 19 countries have already brought their private sector in utility area under RTI like regulations.

A recent Transparency International India Survey has observed that PSEs’ signing an Integrity Pact with the organization has helped in increasing transparency in their procurement process. It has also categorically mentioned that “bribery from the officials of private sector funds is rampant”, and has pointed out that government must bring a strong deterrent tool to curb corruption in private sector thus making a strong case for the private sector to adopt the Integrity Pact in order to bring transparency in procurement process.

The idea of extending public accountability to the private and social service sector is to encourage judicious use of resources and enhancing efficiencies in the system, thereby promoting faster, sustainable and balanced economic growth.’

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