Day 31 – Q. 4. “Corruption in public fund utilization undermines both development and public trust.” Examine the institutional mechanisms to prevent leakages and their limitations. (150 words, 10 marks)

Q. 4. “Corruption in public fund utilization undermines both development and public trust.” Examine the institutional mechanisms to prevent leakages and their limitations. (150 words, 10 marks)

Introduction

Corruption in public funds weakens democratic governance and equitable development. As highlighted by the 2nd ARC, curbing financial irregularities requires robust institutional architecture, transparency, and citizen oversight to restore trust in governance.

 Body

How Corruption Erodes Development and Public Trust
Unchecked corruption in fund usage leads to long-term developmental setbacks and public cynicism. The consequences affect both service delivery and citizen-state relationships.

1. Distortion of Development Priorities: Funds diverted through corruption lead to poor infrastructure and stalled welfare schemes, especially affecting marginalized communities.
2. Loss of Public Trust: Repeated financial scandals (e.g., PDS scam in Chhattisgarh) erode people’s faith in the system, discouraging civic engagement.
3. Lower Investor Confidence: Global agencies rate governance stability; fund misuse lowers FDI and affects India’s Ease of Doing Business perception.

 Institutional Mechanisms to Prevent Leakages
To prevent misuse, various institutions have been set up at different levels to monitor and regulate the flow of public funds. Some have shown notable success.

1. CAG Audits: Constitutional body ensuring independent audits; e.g., its report exposed coal block allocation irregularities.
2. Public Financial Management System (PFMS): Real-time tracking of fund flow improves accountability; used effectively in DBT
3. Social Audits: Mandated under MGNREGA to involve citizens in fund monitoring; has curbed ghost entries in several states.
4. Lokpal and Lokayuktas: Statutory anti-corruption bodies meant to investigate misuse at high levels; aim to ensure impartial action.

 Limitations in Implementation
Despite these mechanisms, multiple challenges hinder their full potential. Weak execution and gaps in accountability dilute their impact.

1. Institutional Delays and Vacancies: Lokpal lacked appointment for years; CAG reports face slow follow-up in PAC and Parliament.
2. Weak Enforcement of Social Audits: In many states, audits lack proper training and independence, reducing their efficacy.
3. Opaque Procurement Processes: Despite e-tendering systems, manipulation through collusion and lack of bidder awareness persists.
4. Lack of Coordination Among Agencies: Overlapping mandates of vigilance bodies often lead to confusion and diluted accountability.

 Way Forward
Tackling fund corruption requires systemic improvements and local-level empowerment. These measures aim to ensure both transparency and citizen participation.

1. Leveraging Technology: Expand blockchain-based tracking and geo-tagging of assets for tamper-proof fund utilization records.
2. Strengthening Local Oversight: Empower Gram Sabhas with training and digital tools to scrutinize fund usage effectively.
3. Ensuring Accountability: Fast-track courts and timely departmental action against corrupt officials must be institutionalized.

 Conclusion

Fighting fund-related corruption is key to inclusive development. As Kofi Annan rightly said, “Corruption is an insidious plague…undermining democracy and the rule of law.” Only integrity-driven reforms can restore public confidence.