Non-lapsable fund mooted for defence upgrade

Idea of creating corpus is for almost a decade

The defence ministry has proposed creation of a non-lapsable rolling fund to facilitate buying heavy-duty military hardware like artillery guns, combat aircraft, choppers, warships and submarines.

The defence ministry has decided to set up a rolling capital fund account for defence modernisation after discussing the pros and cons threadbare within the ministry and the services at least three times. A proposal seeking the finance ministry’s approval was sent on February 9.

Though the previous government did not favour such a corpus, Defence Minister Manohar Parrikar decided to review the idea, being pushed assiduously by the Parliamentary Standing Committee on Defence for years.

 “It has been felt that the utility of creation of a non-lapsable, roll over fund for capital (acquisition) can’t be completely negated as the same would help in eliminating the prevailing uncertainty in providing adequate funds for various defence capability development and infrastructure projects,” stated the ministry in a note that was shared with the House panel.

“The Ministry of Defence therefore has reviewed its stated position taken so far and proposes to take up the case for setting up of a capital non-lapsable, roll–on fund afresh with Ministry of Finance immediately,” it added.

The idea of creating such a corpus has been around for almost a decade. It was announced by former finance minister Jaswant Singh in his Budget speech in 2004. But after the Atal Bihari Vajpayee government was defeated few months later, the idea was given a quiet burial.

While the proposal is yet to find favour with the Union finance ministry, a panel of lawmakers has extended their support to the idea. The ministry, under Arun Jaitley, who also served as the defence minister for a few months, however, conceded that it would consider the suggestions with an ‘open mind.’

“The intention of the committee in recommending such a fund for defence modernisation is primarily for ensuring that the money allocated for a particular item is spent on the specified item only, not necessarily in the same Financial year. The committee are glad to note that the Ministry of Defence has now reviewed its stated position,” the panel said in its report.