Wednesday, May 29, 2024

Defence Ministry Shelves Non-Lapsable Fund As New Capital Budgeting Process Is Implemented

By Staff Correspondent

India’s Ministry of Defence has revealed a new system for allocating capital budgets that renders the creation of a non-lapsable fund for defence modernisation unnecessary. The fund, which was previously under discussion, aimed to provide a pool of dedicated funding for capital-intensive purchases, such as fighter jets and warships. However, the uncertain nature of defence purchases and the disparity between projected expenses and actual allocations granted by the government each year has led to calls for more reliable funding streams.

Giridhar Aramane, the Defence Secretary, has confirmed that a new mechanism has been put in place that will ensure that the entire expenses projected by the armed forces will be met by the finance ministry. He also stated that the concept of a non-lapsable budget may not be feasible due to the parliamentary approval required every year for the budget process. Instead, a rolling budget will be used to ensure that the equipment needs of the armed forces are met.

According to an army representative, a more accurate system for estimating expenses has been established, which accounts for committed liabilities and automates projections. The representative further added that earlier, when projections were not automated, the armed forces tended to ask for more funding than required, and it was generally accepted that they received a lesser amount.

Industry experts have welcomed the move to establish a more reliable funding stream for defence modernisation. They believe that the new consultative process will help ensure that the armed forces receive adequate funding for their needs. This year, the entire projected capital expense of Rs 1.48 lakh crore has been granted to the armed forces, marking a significant improvement over past budget cycles.

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