The 15th Finance Commission had recommended a Non-Lapsable Defense Fund of Rs 2.38 lakh crore for the modernization of the army from the year 2021 to 2026, which has been agreed by the Central Government. During the discussion on Budget 2021, Finance Minister Nirmala Sitharaman said that we broadly agree on the recommendations of the Non-Lapsable Fund of the 15th Finance Commission for Defense and Internal Security. He said that now its modalities and structure will be worked out.
As per the recommendation of the 15th Finance Commission, the Central Government has suggested reducing the tax revenue to be shared with the States from 42% to 41% and recommending 1% of this revenue to this fund. This would mean that the states would have to bear the expenses of this fund, while Defense and National Security are the responsibility of the central government as per the 7th schedule of the Constitution. The motive behind the recommendation of this fund is that it will bridge the gap between the budget and allotted budget for defence and internal security.
Recommendation to allocate Rs 51,000 crore every year
Let us tell you that there has been a demand for non-lapsable funds from the Ministry of Defense for a long time so that there is no shortage of budget for military modernization. Non-lapsable fund means a fund in which the money allocated does not lapse even after years pass but can be used further. According to the Finance Commission report, a non-lapsable fund of Rs 2.38 lakh crore has been recommended for the years 2021 to 2026, stating that a maximum of Rs 51,000 crore should be allocated to this fund every year. According to the recommendation, the Ministry of Defense will have the authority over this fund and the Ministry of Home Affairs will be able to use the same part of the fund which will be allotted to it.
Funds will be used here
According to the Finance Commission report tabled in Parliament, non-lapsable funds will be used for three things. The fund will be used for procurement for the first defense services mordenization. It can also be used for procurement for Central Armed Police Force (CAPF) and for modernization of State Police Force. Apart from this, a part of the fund will be spent in the welfare of army and paramilitary personnel. The recommendation of the Finance Commission clearly states that this fund will be in addition to the defence budget.