The idea of setting up a Non-lapsable Defence Modernisation Fund is off the table for now, top government officials told The Hindu, stressing that all defence funding needs are being met as and when they arise, and creating a non-lapsable pool has drawbacks as it affects parliamentary scrutiny and accountability.
Among Central ministries, defence spending accounts for the largest outlays and the Ministry of Defence (MoD) had informed Parliament as recently as December 2023 that a “separate mechanism is being worked out” by the Ministry of Finance in consultation with the MoD to explore a special dispensation to operationalise a “Non-lapsable Defence Modernisation Fund”.
“As of now, no such decision has been taken on such a Fund and it is not under any active contemplation because there are drawbacks such as reducing parliamentary accountability. The only funds that are non-lapsable traditionally are those funded through cesses levied for a specific purpose,” a top Finance Ministry official said on the issue.
