The Ministry of Defence is working out a separate mechanism in consultation with the Ministry of Finance for having a special dispensation to operationalise a non-lapsable defence modernisation fund.

At present, the Constitution provides that no money can be spent by the government from Consolidated Fund of India without authorisation through an annual Budget presented before Parliament, Minister of State for Defence Ajay Bhatt said in a written reply in Lok Sabha on July 28.

No Progress Made: Parliamentary Panel

A parliamentary committee in its report has urged the MoD to create a dedicated fund for committed liabilities and new schemes, adding that it has observed “no progress” in this regard

In its previous report, the committee recommended making capital Budget ‘non-lapsable’ and making it ‘roll-on’ in nature. Under the existing rules, the funds lapse at the end of each fiscal

Congress MP from Anandpur Sahib Manish Tewari had asked the question. The MoD has said since authorisation under the ‘Appropriation Act’ is meant for budget of a particular financial year, the same does not allow operationalisation of public fund which is non-lapsable in nature.

Creation of such a non-lapsable defence modernisation fund has been in the works for long and despite having being backed by the 15th Finance Commission for 2021-26, it is yet to okayed. The commission recommended setting up a dedicated, non-lapsable modernisation fund for defence and internal security to bridge the gap between projected budgetary requirements and budget allocation. The report of the commission was accepted in principle by the government. The commission had recommended an allocation of Rs 1,50,000 crore for the first year. The total indicative size of the proposed fund over the period 2021-26 is capped at Rs 2.38 lakh crore. Last year, the Parliamentary Standing Committee on Defence said a ‘non-lapsing’ fund be created for military modernisation.