Def Min wants non-lapsable capital fund; writes to finance min

In a significant move, the defence ministry has sought setting up of a non-lapsable capital fund so that the unspent money does not go back at the end of any fiscal.
The details of the demand by the defence ministry to roll out the capital fund account have been mentioned in a latest report by the parliamentary standing committee on defence which was tabled in Lok Sabha today.
The report said the defence ministry has sent a proposal to the finance ministry on February 9 seeking in-principle approval for creation of the non-lapsable capital fund account to remove uncertainty in availability of funds for military modernisation.

As per existing norms, money given to any ministry or department under budgetary allocation has to be spent within the fiscal and the unspent amount goes back to the finance ministry at the end of the financial year.
According to the report of the committee, the finance ministry showed reluctance to the proposal by the defence ministry saying funds requirement for military modernisation can be addressed through normal budgetary mechanism.
"There is no specific advantage for creating a reserve/corpus fund for this objective. The ministry would consider recommendations made in this regard with an open mind with a view to evolving an effective and efficient arrangement," the finance ministry said, responding to a query on the issue by the panel.

The parliamentary standing committee on defence has been pushing for setting up of the non-lapsable fund since 2003.

"The committee are of the opinion that creation of a non-lapsable defence capital fund account is an imperative need for enhancement and heightened operational prepardness of our defence forces," the panel headed by B C Khanduri said.
It said the finance ministry should not have any rigid view on the demand by the defence ministry.
"Moreover, creation of such a fund would also ensure that procurement of equipment, arms and ammunition for our defence forces which are in the pipeline and in the stage of fructification is not delayed because of lack of money due to technicalities of rules and regulations," the panel said.

The committee also cited example of non-lapsable central pool of resources fund for the north eastern region which is being used to implement various major infrastructure projects in the region.
The defence ministry was not very keen to go for the non-lapsable fund when suggestions were made in this regard by the parliamentary standing committee in the last few years. But now the ministry has come out strongly for it.