The Parliamentary Standing Committee on Defence has advocated for making the capital fund corpus for the Defence Ministry non-lapsable.

The Defence Ministry had in February approached the Finance Ministry for creation of a non-lapsable capital fund account, but there was no progress in the matter.

A non-lapsable fund would mean the unspent amount from capital budget of the ministry will not lapse, and will continue in the next fiscal.

A parliamentary panel on Defence, in a report tabled in the Lok Sabha on Thursday, said a proposal for obtaining 'in-principle' approval of the Ministry of Finance on creating a non-lapsable Capital Fund Account has been sent on February 9, 2017 by the Ministry of Defence with the approval of the then Defence Minister.

The committee, headed by BJP MP Maj. Gen. (retd) B.C. Khanduri, said they are "despondent" to note that the Finance Ministry has not been in favour of creating a 'Non-lapsable Defence Capital Fund Account'.

According to the report, even the Defence Ministry was not initially enthusiastic about a non-lapsable capital fund.

The panel's report said in the past, the Defence Ministry had in general, not favoured the proposal for constituting a non-lapsable Defence Capital Fund Account.

The Defence Ministry cited a number of reasons, including limitations of the utility of such a proposal as Parliamentary approval would be required for appropriating any sum from the Fund, guidelines of Finance Ministry which stipulate that, Reserve Funds can be created when government has surplus funds, and assurance of the Finance Ministry that additional funds for the modernisation of Services would be made available. In addition, in last few years there have been no occasion where any substantial amount was left at the end of the fiscal year.

However, the Ministry later admitted that the utility of creation of a non-lapsable, roll over fund for Capital cannot 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.

A proposal was then sent to the Finance Ministry, but the Finance Ministry did not appear in favour of the move.

As per the Finance Ministry, the balance available in the corpus fund at the commencement of the new financial year would not be available automatically for spending and approval of the Parliament through valid appropriation would be necessary.

The panel however said it was of the opinion that a non-lapsable Defence Capital Fund Account is an imperative need for enhancement and heightened operational preparedness of the Defence Forces.

"Even if certain financial rules and regulations have to be amended for creation of a 'Non-lapsable Defence Capital Fund Account' to meet the requirements of our Defence forces, it can and should be done in the interest of the nation," the panel said.

The panel said the Finance Ministry should not have any "rigid view" in this regard.

"Moreover, creation of such a fund would also ensure that procurement of equipments, 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 added.