NEW DEFENCE FUND LEGALLY SOUND: FFC CHIEF NK SINGH
Every Indian citizen should contribute towards funding defence and internal security needs of the country, according to a legal opinion obtained by the 15th Finance Commission (FFC). The commission has obtained comprehensive legal opinion on the issue from veteran lawyer K Parasaran, FFC chairman NK Singh said in an interview.
NEW DELHI: Every Indian citizen should contribute towards funding the defence and internal security needs of the country, according to a legal opinion obtained by the Fifteenth Finance Commission (FFC).
The commission has obtained comprehensive legal opinion on the issue from veteran lawyer K Parasaran, FFC chairman NK Singh said in an interview. If FFC accepts the legal advice, the commission’s final report to be presented in October could well seek the creation of a non-lapsable defence and internal security fund.
“Parasaran has opined that it (funding for defence and internal security) transcends any definition of classification. He has traced the evolution of the world
through Vedas, Puranas and Arthashastra, that this is the primary obligation of every citizen of India, obligation for which he must contribute in some way or the other to ensure security and stability of India. This transcends in a way the artificial constructs (of Centre and states),” added Singh.
In an amendment to the Terms of Reference (ToR) of FFC, the government in July last year asked it to “examine whether a separate mechanism for funding of defence and internal security ought to be set up and if so how such a mechanism could be operationalised”.
Since defence procurement and acquisition involves long gestation periods and funds allocated for capital acquisition in a particular fiscal are returned if not exhausted in that year, a nonlapsable fund will ensure assured supply of funds when needed.
FFC has constituted a committee under its chairman to take a final call on the matter. The home secretary, defence secretary and expenditure secretary will be members of this committee.
“The (finance) ministry has proposed setting up a non-lapsable fund, levy of cess, monetization of surplus land and other assets, tax-free defence bonds and utilizing the proceeds of disinvestment of defence public sector undertakings,” said the first report of FFC tabled in Parliament on February 1.
States had earlier objected to the ToR fearing that instead of a two-way distribution of net central taxes between the Centre and states, such a fund could reduce their share if a three-way distribution is carried out by FFC.
“Constitutionally, defence is in the Union list, not in the state list. If you do a carve-out for defence, who gets to control the money? Do you then have some sort of a defence board in which there are states’ representatives? It will open up a whole can of worms. It will almost certainly be challenged by states,” former principal economic adviser in the Planning Commission Pronab Sen said in December.