Finance ministry working on Non-Lapsable Defence Modernisation Fund

NEW DELHI: The defence ministry is working with the finance ministry in order to operationalise the Non-Lapsable Defence Modernisation Fund (DMF).

The Fifteenth Finance Commission of India in 2021 in a report tabled in the Parliament had recommended setting up a Rs 2.38 lakh crore non-lapsable Modernisation Fund for Defence and Internal Security (MFDIS) to bridge the gap between projected budgetary requirements and budget allocated for defence and internal security.  

“The proposal for creation of DMF is under consideration with Ministry of Defence,” defence ministry informed Parliament in a written reply.
"DMF will be available for modernization of Defence Forces and would supplement the regular yearly budgetary allocations by eliminating any uncertainty in provisioning of adequate funds for various defence capability development and infrastructure projects, " it added. Defence ministry for long had been demanding setting up of such a fund due to long trajectory of military modernisation.

The money for the fund is supposed to come from Consolidated Fund of India, disinvestment proceeds of defence public sector undertakings (DPSUs), proceeds from the monetisation of surplus defence land, including realisation of arrears of payment for defence land used by State governments among others.