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Subject: Conflict of Interest

Minister in RS: Potential conflict of interest in RDI Fund disbursement
Why in the News

The Science and Technology Minister told the Rajya Sabha (RS) on 30 July that seven members of a fund’s investment committee held personal stakes in at least 15 companies later selected to receive money from the Research, Development and Innovation (RDI) Fund. The disclosure shows the fund’s own safeguard against conflict of interest existed only on paper, since the government could not confirm whether the affected members recused themselves from those decisions.

How does the RDI Fund disburse money?
1. Purpose: The RDI Fund is a Rs 1 lakh crore corpus created by the Centre last year to provide long term, low cost financing to the private sector for research, development and innovation, particularly in high priority areas such as deep tech.
2. Channel: The money is not disbursed directly. It flows through designated Second Level Fund Managers (SLFMs), organisations empowered to invest in private companies through equity, debt or a mix of both.
3. Current SLFMs: The Technology Development Board (TDB), under the Department of Science and Technology, and the Biotechnology Industry Research Assistance Council, under the Department of Biotechnology, are currently functioning as SLFMs.
4. Vetting step: Every SLFM must maintain an investment committee. The committee assesses and vets investment proposals from private companies before any RDI Fund disbursement is approved.
What did the disclosure in Parliament reveal?
1. Scale: Seven members of the TDB’s investment committee were named as holding personal investments in at least 15 entities separately selected to receive RDI Fund money.
2. Policy on paper: The Minister said the TDB has a conflict of interest policy for investment committee members but did not specify its content or confirm whether it was followed in these cases.
3. Guideline language: The RDI scheme’s implementation guidelines require the investment panel to be constituted in a way that avoids potential conflicts of interest, and require SLFMs to ensure no conflict arises in the choice of projects.
4. Acknowledged risk: The guidelines themselves flag the likelihood of domain experts on an investment committee also being investors in the ideas and companies they assess.
5. Unanswered question: The government’s response did not clarify whether the named members took part in decisions selecting companies they had invested in, or whether they recused themselves.
Why does a stated conflict of interest policy fail to reassure?
1. Undisclosed content: A policy whose text and enforcement record are not placed in the public domain cannot be verified by Parliament or the public.
2. Structural design flaw: Recruiting domain experts, who by definition work in the same sector as the startups being funded, builds the possibility of conflict into the investment committee’s composition itself.
3. Reactive disclosure: The information became public only because a Rajya Sabha member specifically asked for it, not because the government or the TDB disclosed the stakes on its own.
4. No recusal record: Without a public record of recusal, a conflict of interest policy functions as a stated intention rather than an enforced rule.
What are the challenges to conflict of interest management in the RDI Fund?
1. No central registry: With disbursal spread across multiple SLFMs, there is no single public registry tracking investment committee members’ personal stakes across all participating institutions.
2. Small expert pool: Deep tech and frontier research fields draw on a narrow pool of domain experts, which raises the odds that any given panel will include stakeholders in the sector it is vetting.
3. Scale of exposure: As the RDI Fund’s Rs 1 lakh crore corpus is progressively deployed, an unaddressed conflict of interest risks recurring at a far larger scale than the 15 companies disclosed so far.
4. Weak parliamentary oversight: Parliament’s scrutiny in this case was confined to a written question and answer, without an independent audit of the investment committee’s decisions.
5. Precedent risk: Confidence in the fund’s neutrality among companies that were not selected depends on conflicts being addressed transparently, not merely acknowledged.
Conclusion

The RDI Fund’s design assumed that a stated conflict of interest policy and a warning in its guidelines would keep evaluators and beneficiaries separate. The Rajya Sabha disclosure shows that assumption has already failed in at least 15 cases, and the government has not clarified whether any safeguard was actually applied. What remains unresolved is whether recusal was followed in practice, a question Parliament has not yet forced the government to answer.

Back2Basics:

RDI Fund
1. Approved by the Union Cabinet in 2025 as a Rs 1 lakh crore corpus to finance private sector research, development and innovation, especially in strategic and sunrise sectors.
2. Anchored under the Department of Science and Technology, with the Anusandhan National Research Foundation providing overall research policy coordination.
3. Designed to provide long term, low cost financing, distinct from grant based research funding.
4. Disbursed through Second Level Fund Managers such as the Technology Development Board and the Biotechnology Industry Research Assistance Council, each running its own investment committee.
PYQ Relevance

[UPSC 2018] What is meant by conflict of interest? Illustrate with examples, the difference between the actual and potential conflicts of interest.

Linkage: The PYQ examines the concept of conflict of interest in public decision-making and governance. The article highlights potential conflicts in the RDI Fund’s investment process and the importance of transparency, disclosure, and recusal.
July 31, 2026
Public servants are likely to confront with the issues of ‘Conflict of Interest’. What do you understand by the term ‘Conflict of Interest’ and how does it manifest in the decision making by public servants? If faced with the conflict of interest situation, how would you resolve it? Explain with the help of examples.

June 22, 2026
Conflict of interest in the public sector arises when (a) official duties, (b) public interest, and (c) personal interest are taking priority one above the other. How can this conflict in administration be resolved? Describe with an example.

June 22, 2026
What is meant by conflict of interest? Illustrate with examples, the difference between the actual and potential conflicts of interest.

In public administration, a Conflict of Interest (COI) is a situation where the private interests of a public official clash with their professional duties and responsibilities.

Manifestation of conflict of interest

Financial Investments in companies regulated by one’s own department.

Family Ties (Nepotism). Eg- Chanda Kochhar Case

Post-Employment Ambitions (Revolving Door). Eg- “Amakudari” in Japan

Gifts and Hospitality

Outside Directorships

Personal Biases

Secondary Employment. Eg- Moonlighting

Property Interests

Actual vs. Potential Conflict of Interest

Ways to Prevent Conflict of Interest

Mandatory Disclosure of Assets (2nd ARC)

Cooling-off Period

Code of Ethics and office of Ethics Commissioner

Institutionalized “Conflict of Interest” Registers

Integrity Pacts

In a democracy, the appearance of integrity is as important as integrity itself. Moving from a culture of secrecy to a culture of disclosure, can help maintain public trust in governance.

June 22, 2026
Ms. X is a mid-level civil service official working in the urban development department of a major city. Recently, she was involved in approving a contract for a public infrastructure project — a new community park. During the approval process, she received a piece of confidential information indicating that one of the shortlisted contractors had a history of poor workmanship and allegations of corruption in other cities, though nothing had been legally proven. The Head of the Department, Mr. Y, advised her not to disclose this information to the project committee or the public because it could delay the project and damage the city’s reputation. However, Ms. X believed that withholding such information compromised transparency and public trust. What amongst the following should Ms. X do now? 1. Immediately disclose the information to the project committee and the public 2. Recommend removing the contractor from the shortlist to protect the project’s integrity 3. Propose a ‘limited disclosure’ to an oversight committee, while keeping the information confidential from the public for the time being Select the answer using the code given below

Ms. X is a mid-level civil service official working in the urban development department of a major city. Recently, she was involved in approving a contract for a public infrastructure project — a new community park. During the approval process, she received a piece of confidential information indicating that one of the shortlisted contractors had a history of poor workmanship and allegations of corruption in other cities, though nothing had been legally proven. The Head of the Department, Mr. Y, advised her not to disclose this information to the project committee or the public because it could delay the project and damage the city’s reputation. However, Ms. X believed that withholding such information compromised transparency and public trust. What amongst the following should Ms. X do now? 1. Immediately disclose the information to the project committee and the public 2. Recommend removing the contractor from the shortlist to protect the project’s integrity 3. Propose a ‘limited disclosure’ to an oversight committee, while keeping the information confidential from the public for the time being Select the answer using the code given below:

May 31, 2026