Unit 7: Probity in Governance

Social Audit
Social Audit is the audit of a scheme jointly by the Government and the people, especially by
those who are affected by the scheme or its beneficiaries. It is a powerful tool to promote
transparency, accountability and people’s participation in the schemes meant for them, as it helps
to narrow the gaps between vision/goal and reality, between efficiency and effectiveness.

In this audit, the official records are reviewed, and it is determined whether state reported
expenditures reflect the actual money spent on the ground. For example, Civil society
organizations (CSOs), non-governmental organizations (NGOs), political representatives, civil
servants and workers of Dungarpur district of Rajasthan and Anantapur district of Andhra
Pradesh collectively organize such social audits to prevent mass corruption under the Mahatma
Gandhi National Rural Employment Guarantee Act (MGNREGA).

Most States have set up an independent Social Audit Unit (SAU) and some have even begun to
facilitate Social Audit in other programmes, including Pradhan Mantri Awas Yojana, National
Social Assistance Programme, Midday Meal Scheme and Public Distribution System.

Different types of audits:

a) Regulatory audit: To check whether there are fraudulent activities going on or not.
b) Proprietary audit: Money may not have been spent economically and is wasted. This audit
helps check that.
c) Performance audit: Nature of spending or
earning may not come out with the required
result/objective. This type of audit helps
check the functional (job related) and
structural level (organizations) in
performance and increases efficiency.

Social audit is a contemporary version of Audit

and not only takes into consideration
economical activities but also social and cultural
aspects by taking a holistic view of policy
impact. It does a detailed study of socio-
politico-economic-psychological dimensions of the society and also the environmental
dimensions in order to bring about true development of the country and its people.

Role of Social Audit

• Accountability: Social audit fixes accountability of public
servants, increases efficacy and effectiveness of local
development programmes.
• Transparency: Social audit enhance transparency by
enforcing the right to information in the planning and
implementation of local development activities.
Transparency in public schemes reduces corruption and
increases outcomes.
• Encourages community participation: Social audit
creates awareness among beneficiaries and providers of local social and productive services.
Local communities become important stakeholders in the success of public welfare schemes
thus improving outcomes through periodic evaluation of the outcomes of policies.
• Empowering marginalized: It is important that marginalized social groups, which are
normally excluded, have a say on local development issues and activities and have their
views on the actual performance of local elected bodies. Through social audits these groups
can have an impact on policies implementation and thus increasing outcomes.
• Policy evaluation: Social audits play an important role not in policy implementation but also
policy evaluation. Thus, social audit also assesses the physical and financial gaps between
needs and resources available for local development thus improving policies and outcomes.
Challenges:

• The lack of adequate administrative and political will in institutionalizing social audits to
deter corruption has meant that social audits in many parts of the country are not independent
of the influence of implementing agencies.
• Social audit units, including village social audit facilitators, continue to face resistance and
intimidation and find it difficult to even access primary records for verification.
• People’s participation has been minuscule due to the lack of education, awareness and
capacity building among the common masses.
• There is an absence of an independent agency to investigate and act on social audit findings.
Suggestions:

• Citizens groups need to campaign for strengthening social audits and make real progress in
holding the political executive and implementing agencies accountable.
• A team of social audit experts should be established in each district who are responsible for
training social audit committee members (stakeholders).
• Training programmes should be created on social auditing methods such as conducting and
preparing social audit reports, and presentation at Gram Sabha.
• The system of social audits needs synergetic endorsement and a push by multiple authorities
to establish an institutionalized framework which cannot be undermined by any vested
interests.
The Social Audit process is intended as a means for social engagement, transparency and
communication of information, leading to greater accountability of decision-makers,
representatives, managers and officials. Thus, application of Social Audit holds tremendous
potential in bridging gaps between policy objectives and outcomes.

Lateral Entry
Going against the famous dictum that ‘’experts must be on tap, not on top’’ and in line with
recommendations of Hota, Alagh and Baswan committees, government in 2018 had
decided to introduce lateral entry. But this recruitment procedure has certain issues
related with it.
Benefits of lateral entry:
• Bring in more professionalism, fresh ideas and new approaches in the system.
• Better decisions and policy making
• Improved work culture and more efficiency, economy and effectiveness of
organizations.
• Innovation in implementation of policies
• Expertise for emerging domains of policy making like AI, cyber security, climate
change etc.
• Brings in more competition and break away the so-called cartel of IAS officers in the
top brass.
• Cross flow of ideas between public and private sectors.
• Has been successful in NITI Ayog in India and many other nations like USA use it on
regular basis.
Concerns:
• Favoritism, as the move is criticized as ploy for induction of loyalist in the name of
experts.
• No clarity for how long such experts will serve. Also, it is difficult to pinpoint
accountability and responsibility for decisions taken by such experts
• Question on impartiality and neutrality: experts coming from different fields may be
partial and biased for that field and associated companies.
• Private business may plant their people to influence policies in their favor.
• Issue of reservation is unclear in such recruitment.
• Public interest is different from profit orientation.
• Demoralization of existing civil servants.
• Unlike civil servants’, private experts do not have long term stake in government
policies.
• Corruption may happen in recruitment, as unlike UPSC, no stringent mechanism is
followed.
• Specialists have limitations because a specialist, by definition, is someone who knows
more and more about less and less, whereas policy formulation requires holistic view.
What is needed to make it a success?
• Training in emotional intelligence of recruited officers.
• Selection through well-defined process by UPSC with clear service conditions and
security
• Matrix form of organizations instead of hierarchies.
• Concentrated efforts to help officers of AIS to acquire specialization in broad sectors
like infra, health, finance based on their interest and qualification, aptitude and
preferences.
• deputation to private sector of AIS officers as recommended by parliamentary panel
and Second ARC.
• appraisal mechanisms of 360 degree where feedback of civil servants is taken from all
stakeholders.
• Recommendations of 10th ARC report which calls for encouraging bureaucrats to go for
higher studies and write papers for reputed journals.
Lateral entry, if implemented properly, may foster more competitive spirit and eventually
prove to be pioneering initiative in public interest.

Whistle blower Protection

What is Whistle Blowing?
Technically whistle blowing is the act, for an employee or a former employee, of disclosing what
he believes to be unethical or illegal behaviour to higher management (internal whistle blowing)
or to an external authority or the public (external whistle blowing).
The ultimate aim of the whistle blowing process is to protect public interest. Accusations regarding
an official’s unusual sexual or religious experiences may well appeal to the public’s interest
without being relevant to the “public interest”.

Ranbaxy case study

Ranbaxy in May 2013 pleaded guilty to felony charges in US for falsifying claims and distributing ‘adulterated
drugs’ and agreed to pay a fine of $500 million. Dinesh Thakur, the former Ranbaxy executive who exposed
dubious manufacturing practices in the company, pocketed $49 million for blowing the whistle. Thakur was tasked
to scrutinize the data that Ranbaxy submitted for approvals to the US and other foreign markets. He found out that
besides sloppy manufacturing processes, test results were being falsified for HIV anti-retroviral and other drugs. In
2004, after reporting his findings to his superior, his evidence was ignored, and he was accused of watching
pornography on his company computer following which he resigned.
Two years later Thakur made a complaint in the US under the False Claims Act (FCA), also known as a
‘whistleblower’s law’. The government investigated Thakur’s complaint and in May 2013, Ranbaxy pleaded guilty
to criminal and civil charges in a case brought by the US Department of Justice. Thakur, in an interview stated that
 he reported and revealed the information to the US authorities because he was not aware whether a parallel
comprehensive statute existed in India where private citizens were provided protection to help the Indian
government prosecute companies carrying out illegal activities. This incident itself throws light to another very
important aspect of how and why whistle blowing is not being used as an effective tool for fraud prevention in
India.

Ethical issues involved in whistleblowing:

• Professional Responsibility VS organizational Loyalty for the whistle blower
• Duty towards public verses responsibility towards family.
• Professional integrity which calls for loyalty and discipline versus voice of conscience which
calls for taking the side of the truth.
• In the absence of adequate protection to the whistle-blower, he/she will live in constant fear
and anxiety.
• Adoption of legal means to seek information before whistle blowing is important.
• Whistleblowing is a very responsible job. In the absence of sufficient proof irreparable damage
can be caused to the image of the other party.
• Irresponsible whistle blowing can destroy the work culture of institutions and make the
instrument less trustworthy in fighting corruption.

Why do Whistleblowers Need Protection?

Whistleblowers face a number of challenges:
• They often face alienation from their social circles. They lose the goodwill of colleagues or
other such affinity categories.
• Whistle blowing is good for society but bad for career. Most of them are considered not worthy
of being trusted by a future employer.
• Excessive scrutiny of their motives: regrettably, their motive for blowing the whistle is
questioned. They are painted as disgruntled subordinates and colleagues. This scrutiny is more
than what is normally directed at an individual.
• Threat to life and personal wellbeing: There have been multiple instances of threatening,
harassment and even murder of various whistleblowers. An engineer, Satyendra Dubey, was
murdered in November 2003; Dubey had blown the whistle in a corruption case in the National
Highways Authority of India’s Golden Quadrilateral project. Two years later, an Indian Oil
Corporation officer, Shanmughan Manjunath, was murdered for sealing a petrol pump that was
selling adulterated fuel.
• In 2007, the report of the Second Administrative Reforms Commission also recommended
that a specific law needs to be enacted to protect whistleblowers.
• The UN Convention against Corruption to which India is a signatory since 2005, encourages
states to facilitate reporting of corruption by public officials and provide protection for
witnesses and experts against retaliation. The Convention also provides safeguards against
victimization of the person making the complaint.
• The Companies Act, 2013, as well as the Securities and Exchange Board of India regulations
have made it mandatory for companies to take notice of all such complaints. Recently in
2020, the accusations raised against the Infosys Chief Executive Officer (CEO) and other
senior officials have brought back the focus on whistleblowers’ safety in India.
Thus, a comprehensive whistle-blower protection law is necessary to bring probity in the system.
Some specifications of this law can be:
1) Provisions must be added to different laws like those of taxation, public health, education etc.
to protect a whistle-blower from retaliation like dismissal from the service, suspension,
demotion, blacklisting or pay reduction.
2) Punishment (both jail and fine) for people who negligently or malafidely reveals the identity
of a whistle-blower.
3) A neutral arbitration authority is required before a public interest disclosure can be made by a
whistle-blower.
4) Annual reports must be published and should be laid before parliament regarding complaints
and action taken under the whistle-blower mechanism. This will bring transparency.
5) In the private sector, regulatory agencies like SEBI shall get power to provide immunity from
dismissal or retaliation to whistle-blowers. The Companies Act of 2013 has already made it
mandatory for companies to take notice of all such complaints.
6) A reward mechanism to motivate the whistle-blowers and also safeguard them from financial
losses that they may suffer during the process.
7) Strict provisions under IPC and CrPC to punish those who harm whistle-blowers. This will
set a strong precedent and will create deterrence.
8) Proper training for employees so that they can deal with such a situation while protecting
themselves. This will also help in developing a positive outlook towards whistle-blowers.
Retaliation against whistleblowing is like shooting the messenger. Thus, whistle-blower
protection is required to ensure that democracy's integrity is protected, cherished, and upheld.
Legal status of whistleblowing in India
• In 2011 Whistle-blowers Protection Bill was proposed which finally became a law in 2014.
However, it was never operationalized. In 2015, an amendment bill was moved that proposes
whistle-blowers must not be allowed to reveal any documents classified under the Official
Secrets Act of 1923 even if the purpose is to disclose acts of corruption, misuse of power or
criminal activities.
• The Bill also prohibits the reporting of a corruption related disclosure if it falls under any 10
categories of information. These categories include information related to: (i) economic,
scientific interests and the security of India; (ii) Cabinet proceedings, (iii) intellectual
property; (iv) that received in a fiduciary capacity, etc.
• The above two provisions dilutes the very existence of the 2014 Act. This 2015 bill has
lapsed now and has not been reintroduced till now.
• The 2014 act has been passed but still not operationalized by the government.
Thus, strengthening of the whistleblower protection mechanism is required as it will help in
ensuring that the integrity of democracy is protected, cherished and upheld.

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