written by khatabook | May 31, 2021

Can A Government Employee Run A Business In India

As we all know that a ‘Government job’ in India is a sought after post and the most sought after career option amongst the youth. It allows you to serve your country and brings you job-stability. These jobs help you live a healthy and worry-free life both during the service and after retirement.

Whatever it be a position or post in the Government service, some benefits are usually available. They struggle hard to achieve that career, going through tough competitive exams and training.

Don’t you think Government Employees are distinguished? Can a Government Employee do other Private Business in India?

Also Read: 10 Tips for Successful Money Management for A Profitable Business

Who is a Government Employee?

Let us first understand who are the people falling under the category of ‘Government Employee’ or termed as a ‘Government Servant’.

As per Rule 2(h) of CCS (CCA) Rules, a Government Servant means a person who-

  1. is a member of a Service or holds a civil post under the Union, and includes any such person on foreign service or whose services are temporarily placed at the disposal of a State Government, or local or other authority;
  2. is a member of a Service or holds a civil post under a State Government and whose services are temporarily placed at the disposal of the Central Government;
  3. is in the service of a local or other authority and whose services are temporarily placed at the disposal of the Central Government.

So basically, any person being a member of the Service or holding Civil Post in either  State or Central Government, or a Local Authority is termed as a ‘Government Employee’.

Why do government employees have restrictions?

Now to understand further, it is very important to know what positions do these Government employees hold and what is their relevance. No restrictions arise unless there are serious problems that may happen.

The government for any State or Country is appointed to govern the country and look after the administrative, legislative, executive functions of the Land. India, being a democratic nation, its Government is ‘By the people and for the people’. The government gets its funds from the people of the country who pay taxes on the income they earn. Direct taxes and Indirect Taxes form a major source of income for the Government. 

Also, the Government raises funds through various bond schemes for the Infrastructure and Development projects, Banking Projects they take up for the economic and social development of the nation, the business they carry for the public interest. 

Why do restrictions on activities of government employees matter?

All this is public money and the Government is accountable to the public for using every penny it earns. A Budget gives an idea of the estimation of Government expenses and incomes. It still becomes essential to strictly manage the usage of knowledge, training, and money it provides to its employees to achieve its policies.

  • Accountability – every individual is concerned about the use of the money it offers to the Government either through Investments or Taxes. The Government makes sure that it gives a report to the public about this. For this purpose, Public Accountants, Administration Officers are appointed to take care of the Finance of the country under the guidance of the Ministry of Finance.
  • National Security Concerns – Let us take an overview of other services that concern the security of the Nation. Government employees at the Air Force, Navy or Army, are given strict training and may possess certain information that is very important. From the National Security point of view, such information cannot be leaked at any price. 
  • Confidentiality – Similarly, those working in the economic, scientific research, educational, Sports, Accounting, Medical, Engineering, or any other field, in the Government, have the grave responsibility of keeping their information safe. The possession of very secret information and data regarding the functioning of the Government should be safe. A government cannot afford to leak critical information amongst the general public.

We maintain the confidentiality for the organization we work for, among our family matters, in our relationships. We also maintain the confidentiality of our own mobiles and social media accounts. This concerns the security of the entire nation. Therefore the Government has to put sufficient restrictions for the well-being of the public and social trust and confidence.

So now, we realize the reason for such provisions and restrictions on Government employees. With this, it will be easy to proceed ahead.

Can a government employee join for work elsewhere?

Government employee may apply for a post for employment elsewhere and such applications. However, these can either be held back or the Government may demand resignations from the current post to move ahead with the sanction of such applications.

This depends on various factors like the amount spent by the Government on the training provided to the employee; the confidential information that the person possesses. Is the applicant a Disabled person or a person of Scheduled Caste or Scheduled Tribe; does the person work on a permanent or temporary basis, etc? 

For example, Government employees of Scheduled Caste and Schedule Tribes or disabled ones are allowed to get employed elsewhere because the Government does not wish to devoid them of their prospects. But then that is about employment. What about Business? 

Can government employees do private business, while still in service?

‘Not allowing Government employees to do other Private Business’, is one amongst the many restrictions imposed by Government

Businesses seem to have loads of Capital investment and risk involved, but as they say, ‘More the Risk, More the Returns’. To earn a bit more than the regular fixed monthly incomes, more people now turn more towards Business opportunities and prefer to be the boss. Even the government has realized this shift of career preferences and owing to the economic concerns of the nation, a lot of grants and opportunities are provided to encourage start-ups in India.

Also Read: 15 Best Online Business Ideas to Start with Less Money 2021

But this does not hold true for its employees. A government employee cannot run a business. 

Following are the factors considered while imposing such a restriction.

  • Ethical Implications:

A Government employee is expected to discharge his duties towards the public with the utmost integrity and objectivity. He is required to follow ethical practices and a professional code of conduct both on and off service. Carrying on a business affects his integrity. It may also lead him to an ethical dilemma that is not at all acceptable. An independent and unbiased approach to work is appreciated and required. 

  • Public Accountability:

As already discussed, Government employees are accountable to Government and in turn, Government is accountable to the Public. Hence it becomes very important to take care of every function that the employee performs. They are supposed to serve the nation and act as its representatives. Carrying on their own private business may compromise their duties towards the nation which cannot be allowed.

  • Corruption:

Giving up ethics and moral values is against social welfare and can lead to distress. Government Employees could be tempted with money and a better standard of living. Thus it could encourage illegal activities and break confidentiality.

  • Conflict of Interest:

Law-makers enact laws and people are expected to follow them. Most of the Government employees form part of the legislative bodies in the country. Also being officers, they stand in the position to give orders and decide for what is to be followed by the general public. On one hand, being a part of that general public, such decisions may lead to a conflict of interest for the person. 

Therefore, a  Government employee who wishes to run a private business has to resign from his ‘Government Post’ to go ahead and pursue his business.

The Central Civil Services (Conduct) Rules, 1964.

Prohibited Work

According to the CCS Rules, 1964, no Government employee shall without the previous sanction of the Government,

  • Engage directly or indirectly in any trade or business, or
  • Undertake or negotiate for any other employment, or
  • Canvass for an elective candidate or hold any elective office, or
  • Portray support for any insurance or commission business owned or managed by any of his family members, or
  • Engage in registration, promotion, or management of any bank or company registered or liable to register under the Companies Act 2013 or any co-operative society for commercial purposes; other than to discharge his official duties, or
  • Associate himself in any sponsored media program produced by a private agency including video magazine, except in an official capacity where the program is commissioned by Government, or
  • Accept any fee for work done by him for a private or public body, unless the government orders so.
  • Sublet or allow any occupation to be conducted in the Government accommodation provided to him.

Work Permissible

A Government employee may without the previous sanction of the Government,

  • Carry out honorary work of social, or charitable nature, or
  • Undertake occasional, literary, artistic, or scientific work, or
  • Participate in Sports activities as an amateur, or
  • Participate in registration, promotion, or management of literary, charitable or scientific work or of similar club or organization aiming at sports, or cultural or recreational activities, registered under Societies Registration Act, 1860, except for cases holding elective office, or
  • Participate in registration, promotion, or management of a Co-operative society substantially for benefit of Government employees, registered under Co-operative Societies Act, 1912, except cases holding elective office, or

Provided that he shall discontinue taking part in such activities if directed by Government and shall inform Government along with necessary details, within 1 month of taking part in such activities.

Some considerations flowing from the consultation with the Comptroller and Auditor General of India

  • Joining of Educational Institutions by Government employees outside Normal Office Hours – The government does not restrict its staff from gaining additional knowledge by joining any such Educational Institutions. However, the timings must not clash with office hours and must not lead to inefficiency on part of the employee. Government considers the tenure of such courses before sanction.
  • Participation in Shramdaan activities – Only participation in Shramdaan activities organized by Government departments or Bharat Sewak Samaj is permitted by the Government. Also, such participation must not collide with the Official duties of the employee.
  • Participation in AIR Programmes – A Government employee may participate in AIR programs related to any broadcasts on literary, artistic, scientific nature and also receive an honorarium for the same. However, where sanction for such programs is necessary, sanction for receipt of an honorarium is also a must.
  • Part-time Examinership for Exams conducted by recognized Universities – This engagement is permitted provided it is occasional in nature.
  • Part-time Employment after office hours – Even if such employment is after office hours, owing to the efficiency concerns of the employee, it is not permitted freely by the Government. However, if this is occasional, then the Government may grant permission for the same.
  • Joining the Civil Defence Service –  A Civil Defence Service forms a very important part of any civilized society. The government may permit such participation as volunteers and also provides requisite facilities for the same. However, those holding key posts are not allowed to go for such participation.
  • Medical Practice during their spare time – Only when the Government employee is willing to practice medicine in spare time, on a charitable basis. The employee should hold a recognized qualification and Certificate of Registration under the relevant law.

Also Read: Top 10 Cities for doing business in India

To sum it up

Hence, considering the above points of law, it is very important that government employees strictly follow the above rules and their terms of Employment, otherwise, it may lead to penalties and loss of job and reputation as well. Alternatively, they may resign from their government job in accordance with the rules and regulations.


Q: Is a Government employee allowed to Trade in the stock market?


Yes. The Government Employee can trade in the stock market through a registered broker. He can also invest in IPOs but he cannot engage in intraday trade or speculative activities in the stock market that is likely to embarrass his official position.

Q: What are the penalties for acting against the rules?


A Government Employee is required to strictly follow the Service conduct rules and if any violation takes place, the person is called upon to present his clarifications. After  scrutiny, if held guilty, his service may be terminated along with the withdrawal of retirement benefits.

Q: Can a Government employee contest elections?


As per the CCS (conduct) Rules 1964, the Central Government civilian employees are prohibited from contesting elections to any Legislative or Local Authorities.

Q: Can a Government employee hold directorship of a Company or be a partner in a partnership firm?


A Government Employee can hold directorship in a private company however he cannot engage in the regular management activities of the company. Hence, he can be a non-executive director of the company. Also, he can be a sleeping partner in a partnership firm.

Q: Can a Government Employee engage in agriculture?


Yes. A Government Employee can engage in agricultural activities provided he has  land of his own. He has to make sure that this work does not affect his duties in any manner.

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