The Ministry of Defence (MoD) has gone back on its demand for a non-lapsable capital fund for defence procurements, even as the Parliamentary Standing Committee (PSC) on Defence on Thursday asked the Ministry of Finance to work out the modalities for the creation of such a fund in consultation with the MoD.

In its latest report presented in the Parliament, the Committee said: “Hence, the Committee would like the Ministry of Finance to work out the modalities for the creation of a 'non-lapsable defence capital fund account' in consultation with the Ministry of Defence and apprise the Committee of the progress made in this direction at the earliest, and not later than three months of the presentation of this report to Parliament”.

However, it is surprising that the MoD is going back on its original demand for such a fund. It was earlier keen on such a fund to prevent the unspent amount in a financial year from being returned to the Finance Ministry as defence purchases generally tend to have long procurement cycles.

On February 2 this year, the MoD had sent a proposal for obtaining an 'in-principle' approval of the Finance Ministry on the creation of the account. But according to the report tabled in Parliament on Thursday, its stand has changed after consultations with the Finance Ministry.

The reasons for no longer seeking the fund are: the limited utility of such a fund, rules governing its creation that state the Government should have surplus funds (which is not so in the prevailing fiscal situation), and assurance from the Finance Ministry for additional funds, if required.