Centre approves the recommendation of Rs 2.37 trillion additional funds for

New Delhi: Union Finance Minister Nirmala Sitharaman announced that the union government has approved the Non-Lapsable Defence Fund recommendation. As per this, Non-Lapsable Defence Fund of Rs 510 billion will be allocated per year, for the next five years, amounting to Rs 2.38 trillion. This will accelerate the modernisation of the defence forces. Confidence is being expressed that henceforth, there will be no shortage of funds for this purpose. This fund is an additional provision over and above the defence expenditure made in the annual budget.

Discussions over the annual budget were held in the Parliament on Saturday. The talks over the yearly budget were being held for the last two days. Finance Minister Sitharaman informed about the Non-Lapsable Defence Fund while answering the queries raised regarding the budget.

The 15th finance commission proposed to reduce the share of the states, in the revenue collected, by 1%. As per this, the share of the states in the revenue collected will be reduced from 42% to 41%. The finance commission suggested that this reduced 1% should be used for Non-Lapsable Defence Fund.

Generally, the funds allocated for a purpose in the annual budget have to be utilised in the same financial year. Otherwise, the fund lapses. But this Non-Lapsable Defence Fund will not lapse even after the end of the financial year and can be used. This step is taken to bridge the gap between the provision of funds allocated to the defence forces and the home department and the necessary financial provision. Finance Minister Sitharaman said that the union government had accepted the Finance Commission’s suggestions regarding the Non-Lapsable Defence Fund. There are reports that this fund may be named ”Naivedyam Fund” or something similar. As per the news report, there is a proposal to contribute Rs 2.38 trillion to the Non-Lapsable Defence Fund in the financial years 2021-22 to 2025-26. Nearly Rs 510 billion will be provided every year.

The use of this fund will be made for defence forces and the home ministry. But the defence ministry will be controlling the fund. The home ministry will be allowed spending only the fund allocated to them. A major part of the fund will be in purchasing equipment necessary for modernisation of the defence forces. The home ministry can use the funds for modernisation of CRPF and state police.

Some part of the fund will even be used in the army welfare activities. The Finance commission clarified that Non-Lapsable Defence Fund would be an additional provision in the union budget, over and above the defence expenditure.