Assignment: Identification of Ethical Dilemma

Submitted to: Dr. Aamir Saeed

Submitted By: Waleed Bin Zubair
Roll No# 43
 OVERVIEW OF FINANCE DEPARTMENT GOVT OF THE PUNJAB

The Finance Department is responsible for supervision and control of provincial finances,
preparation of provincial budget, formulation of Financial Rules and Civil Services Rules
relating to pay, perquisite and pension of civil servants, management of public debt and
administration of Local Fund Audit Department and the Treasuries. Administrative Departments
are required to consult the Finance Department in all matters which directly or indirectly affect
the finances of the province. All important functions of the Finance Department, including
budgeting are performed at the Secretariat.
The major functions of the department are mentioned below:
● Management of public funds
● Framing of financial rules for guidance of departments
● Supervision of accounts of provincial departments
● Framing of Civil Service Rules applicable to all government servants and interpretations
thereof
● Floatation and administration of provincial loans
● Examination and advice on matters affecting directly or indirectly the finances of the
province
● Administration of emoluments, pensions and allowances
● Administration of public revenue
● Communication of financial sanctions
● Examination of all proposals for the increase or reduction of taxation
● Audit matters of provincial receipts and expenditure

Core Functions/Objectives of Finance Department:

● Resource Allocation
● Resource Mobilization
● Revenue Collection
Resource Allocation:
The provincial resources consist of the major share from Federal Government under Federal
Divisible Pool share which almost covers 80% of the total resource allocation. The rest of the
20% share comes from Provincial Own Receipts which include Tax/Non-Tax revenue as well as
Capital Receipts.

Resource Mobilization:
Each year, while initiating the exercise on formulation of the budget, Finance Department invites
tax and non-tax proposals from the Administrative Departments. These proposals, primarily,
aim to mobilize resources of the Province. One of the important requirements of budget 2016-17
would be to prepare tax proposals aimed at generating more revenues, improving tax collection
efficiency, incentivizing tax compliance and discouraging tax evasion so that Government have
enough resource envelope to meet our critical development needs.
Finance Department works on tax proposals for the respective financial year in consultation with
various departments including major revenue generating departments, i.e. Punjab Revenue
Authority, Board of Revenue and Excise & Taxation Department. As a result of this exercise, a
high-powered Revenue Mobilization Committee is constituted to review and finalize these
proposals.
Thereafter, the recommendations of the said committee are presented to Chief Minister and after
approval from the Competent Authority and Cabinet the said tax proposals are implemented
through Finance bill/ notifications.

Revenue Collection:
The revenue collection is based on receipts from tax collecting department i.e. Board of
Revenue, Punjab Revenue Authority, Excise and Taxation Department, Energy and Transport
and the receipts from Non-Tax Departments I.e. Finance, Agriculture, C&W, Police, Mines and
Minerals, Irrigation, Health, FW&F, and Education Departments as well as foreign and federal
grants.

Ethical Dilemma:
The gap or loop hole existing in Public Administration in between indigenous social ethics and
exogenous administrative ethics.

Ethical Dilemma in Finance Department:

Ethical Dilemmas in Finance Department Govt. of Punjab exist at both individual and
organizational level, here below mentioned are following ethical dilemmas faced at individual
level (Public Servants).

Ethical Dilemma Faced among employees:

Some of the most common ethical dilemmas with which public servants of Finance Department
are confronted, revolve around aspects such as:

1. Administrative discretion
2. Corruption
3. Budget Cuts
4. Administrative secrecy
 5. Information leaks
6. Public accountability
7. Policy dilemmas
8. Bureaucratic Culture

Colonial Change:
As we know that finance department has the direct link with IMF and its funds. During the
interviews I have observed that the policies are totally belongs to the NPM role model. Finance
department has been working since the day of independence in both federal & provincial sector.
There were off and on amendments in finance division and it all started in late 90s after
conducting the interviews this thing has been observed all the policies, they have amended is
totally based on NPM policies. Because of NPM centralized structure has been taken which
totally changed the structure.

Ethical Dilemma:
I have conducted 3 interviews of different posts in civil secretariat and by this there is a bit
difference in the opinion of employees. Code A told me that there is a bureaucratic culture is
prevailing and highly centralized structure. But when I asked the same question from Code B he
told us that now the structure has been shifted towards decentralized structure. By this I have
been able to analyze that code A is not satisfied with NPM structure and its model and code B is
satisfied with this NPM models. As we know that NPM helps the limited people who have
different agendas. While in the interviews I have asked regarding the budgeting from code A and
same question have been asked from code B & code C and all of them answer differently and
totally changed. Code A totally agreed with the NPM policies which are totally in favorable for
the public and code A said that budget has been cuts in the recent past years and budget has been
cut in the basic needs of Public sector like health, education etc and code B denied the budget
cuts and he portrayed in a different manner like the budget is been utilizing towards technology
for the better purpose and code C said that there is definitely an impact of NPM in the budgeting
but these changes will be positive in the future as we are promoting the technology. By such
answers there is 100% surety that the dilemmas we have studied in the book is matching with
their statements because IMF also promote the technologies and budget cuts suggestion and they
admitted that their budget plans is totally planned on the instructions of IMF and their guideline.
The corruption element in the finance department has not been highlighted by the interviewees
but I observed that there is a slight corruption element but in different perspective. As we know
that finance department is the main source of giving the budgets to the different department and
the departments utilize their budgets but the utilization of budget by other division like Punjab
Mass Transit Authority, LDA, LTC etc but their check and balance is very low. When the
question has been asked regarding the budget allocation all of them have moreover a same
answer regarding budget allocation. As we know that privatization is the core element of NPM
and IMF and thing has observed as well in the interviews that they have very low check and
balance regarding the best utilization of the budget, and the PMTA have outsourced their budget
and work allocation in different private companies. Metro Project have been allocated to many
other private vendors, and because of this there is extra usage of budget and Govt. recovering the
subsidies which has been given to Lahore & Multan metro and the subsidy amount is recovered
from some other resource as a revenue collection which they have not disclosed. Moreover, the
Punjab Finance Department has its district offices in all over the Punjab and code A & code B
admitted on record that we have very low check and balance mechanism for the audit of field
staff. Most of the employees have been shifted from field staff to civil secretariat and they are
now feeling a complex structure and in the department the transparency have been observed by
the discussion during interviews. Code B seems to be satisfied with the current environment and
code A wasn’t satisfied with the current structure. The dilemma is also have been found. I have
asked from the interviewees regarding the transport companies like LTC, I have asked the same
question from all and all have answered in a same context. I asked that if LTC. LWMC are Govt.
owned companies then how they BOD taking salaries in millions and when they are working in
Govt sector they can maximum reach up to 2.5 to 3 lakhs on highest 22 BPS Scale. In reply code
B said that there is a lack of system and Govt shouldn’t allow such things and he added that by
the orders of Supreme Court no Govt. official allowed to take more than 3 Lakh salary and those
who take more than that are returning their extra amount and those who didn’t returned the
amount yet will be return soon and code A replied that this is totally out of question and it
shouldn’t be happened while, code c disregard this question.

Conclusion:
The notoriety and accomplishment of administration relies on the lead of open functionaries and
what the open accept about their direct. It is consequently of crucial significance that open
functionaries act evenhandedly and decently to all, paying lip administration to moral lead as
well as guaranteeing that these are obviously and without a doubt seen to be finished. It is basic
that every open functionary after tolerating government work perceive that they have an
uncommon obligation to be open, reasonable and unprejudiced in their dealings with society.
Individual personal circumstance ought to be subordinate to the open great in all conditions,
particularly if conditions emerge where the likelihood of an irreconcilable situation may turn into
a moral issue.

Interview Transcription:
Code A:
Name: Roobash Tazein
Designation: Finance Officer
Grade: 16
Years of Services: 1 Year

What is the purpose of this department?

This department is the sole financial services provider to the whole province and main purpose
of this department is to collect the revenue generation

How long have you been working in this department?

Its been a year since I have been hired in finance division through PPSC on 16 Grade

How do you find your job? are you satisfied?

I am not very much happy with my job with there is a very complex structure and strict
environment
Is the finance sector do any of their services outsourced?
No, finance division itself has done no outsourcing but the other department to which we allocate
the budget like Mass Transit Bus they outsourced their work to different other private companies

How finance division allocate their budget and how they maintained the check and
balance?
Check and balance have been maintained through yearly revenue collection according to the
budget allocation and they have to return the 100% revenue according to their budget

Do you think that by such way of revenue collection they will put the extra burden on
public?
Yes, you are right, but they give the subsidy on public use facilities like Metro, LTC etc but
finance department told them clearly to shut those services wo are not generating the revenue,
Return on Investment and soon those services will be close and no subsidy would be given in the
near future.

Do you think NPM has a role in finance division?

NPM has a clear role in finance department because finance department is directly related to
IMF and their policies are the part while we budgeting
What kind of structure prevailing in finance sector?
There is highly bureaucratic culture and highly centralized decision making, private companies
are better in this way where employees work in teams

Do you sense the corruption in finance department?

There is no such corruption in Punjab Civil Secretariat Finance Department but the district office
and filed staff of revenue collection does lots of corruption and there is no such mechanism right
now to less such corruption

Does finance department follow the IMF sanctions and their models of less government and
less budgeting in public basic needs sector?
Yes, we are forced to do such budgeting by allocating the less budget in government hospitals
and less budget for government education institute, as recently the subsidy on free medicines in
government hospitals has been taken off and that practice totally belongs to the models of NPM
& IMF.

Code B:
Name: Saeed
Designation: Asst Director
Grade: 17
Years of Services: 5 Years

How long have you been working there?

Its been around 5 years working in finance department, before that I was working as a District
account officer in Okara

Transfer in Lahore was your own decision or by departmental decision?

Transfer in Lahore was his own personal decision.
How do you people allocate the budget? and what policies you people keep in your mind
while making the budget? and is there any outsourcing from finance department?
There is no such outsourcing in finance department all the operations are in house.

I heard from somewhere that you budget allocation in Punjab Mass Transit Bus, they
outsource their budget to other private companies. Do you agree with that?
PMA is looking after all over the Punjab & LTC is in only urban areas and PMA is under the
supervision of transport department and there are 12 contractors who are working with the
department and there is a lum sum contract with the contractors for sanitation, cleanliness,
development etc

The Punjab mass transit bus is a part of Govt. or is this a public private partnership?
All authorities are under the authority of Punjab government and these departments have been
made for special purposes when government feels that they are not enough to do these stuffs.
Like such there are different companies working in the same way

Is LTC a govt company or a private company?

LTC is a govt company, and element of private element comes when there is a share holding by
rules and laws through section 42 and 24 and company under section 42 company is non profit
organization and there objective is not profit making and the other companies in section 24 and
there motive is profit making and when the company established they give the open market for
the public to buy the shares

You must have heard about NPM, do you think that there is a role of NPM in finance
department and if there is a role then for how long this model is prevailing in Finance
department?
There is a definite role of NPM in finance department, the initiatives have been taken on the
different projects of world bank and implementation was exact according to the demand of world
bank and 2 changes have been observed like the SAP (Structural Adjustment Program) which is
currently been used in world wide and it helps out to locate the data and information on one click
and the other change is Performance Based budgeting and there is two types of budgeting
incremental based budget in which person is been responsible for their duties and financial
authorities have been given to the employees and they can take the decision of their own will and
it’s a centralized and decentralized structure at the moment.
Do you think that by allocating powers to the higher authorities there is a chance of
biasness regarding his decision making and favoritism element?
Autonomy was necessary to be given and departmental based structure is very rigid and rule
based and authority should be given so they may know how to achieve their goals and it will take
time to create the check and balance through SAP and to less the corruption from the field staff.
But there is no such mechanism of performance measure and the salaries have been given to
them and this thing should be end because the money is from public taxes and by such policies
the allocation of budget is not proper.

Do you agree that NPM destroyed the general public? as you were saying earlier that
finance department is following the demands of World Bank and IMF, so by following
their agenda there must be a budget cuts for basic needs of the public?
NPM says that govt role must be less and there is no less budgeting but now there is a new rule
has been introduced that those areas where govt can’t reach and there excess is not possible
where govt start implementing on NPM model by doing public sector privatization by giving the
land to private sector and the rest of the investment is for the private companies so they may
build schools & those schools of govt. runs by the private sector and govt pays them the cost of
per student in the school.

In the middle of our interview you quoted that LTC & LWMC are govt based organization
but as we all know that the govt. official who have reached on his maximum BPS scale 22
can get the maximum salary of 2.5 to 3 Lakhs but when they join such organizations like
LTC & LWMC as a BOD they take salaries in millions, what do you say about this?
On first July 2018 govt passed the letter and it was written the no govt employee will take any
extra salary if he is been transferred to such organization except the deputational allowance and
those who have taken higher salaries will return the extra amount, he further added that there are
many loop holes but whenever the change imposed it will take time and the things will be
beneficial in the future.