The Comptroller and Auditor General (CAG) has rapped the Defence Ministry for "irregular withdrawal of funds" in violation of the Appropriation Act and for "persistent unspent provisions" of the budgetary allocations made to it.
In its report for 2007-08 tabled in Parliament on Friday, the CAG said the Navy and the Air Force made "irregular withdrawal" of Rs 2,745 crore in February-March 2008 to pay two Defence Public Sector units (DPSUs) under a contract for equipment manufacture.
The CAG found out that the sums released as 'On account payment' (for specific expenditure) for meeting committed liabilities for ongoing schemes, which would arise in next financial year, remained unutilised by the Bangalore based Hindustan Aeronautics Limited (HAL) and the Mumbai-based Mazgaon Docks Limited (MDL) till March 31, 2008.
The report said that MDL was paid Rs 1,245 crore in six different instalments and HAL was paid Rs 1,500 crore by Defence Ministry in one go.
The report further said Rs 1,094 crore released in 2005-06 and 2006-07 fiscal were still lying unspent with the two DPSUs.
Payments made to the HAL by the IAF were meant for meeting commitments for the current fiscal whereas MDL received the payments for expenditures to be incurred by it between April and June 2008.