Standing panel miffed: Defence fund non-starter

The Government is yet to get started on setting up a defence modernisation fund and there is little hope of that happening soon. The Standing Committee on Defence has said it is ‘‘extremely dismayed’’ by the government’s failure to set up a defence modernisation fund (DMF), as proposed in the interim budget by then finance minister Jaswant Singh. In its report tabled in Parliament on Thursday, it has also called into question the absence of an announcement to make allocations towards this fund in the General Budget.

Calling it an ‘‘abrupt policy reversal’’, the Committee, chaired by Balasaheb Vikhe Patil, has asked the Finance Minister to immediately set up a DMF with committed allocations for five years, to streamline the annual lapse of fund procedures between the Defence and Finance ministries. The Committee called the Defence Ministry’s annual ritual of having to approach the Finance Ministry for re-allocation of lapsed funds ‘‘dilatory and completely redundant’’.

In February, former finance minister Jaswant Singh had announced the decision to establish a non-lapsable defence modernisation fund of Rs 25,000 crore. This, he had said, was to facilitate defence procurement, which often extends over three years, and required adequate and committed availability of funds.

South Block sources said there were probably conflicting opinions on the subject and a decision would be taken after further discussions between the two ministries.