NON-LAPSABLE FUND FOR DEFENCE MODERNISATION
Articles 112-114 & 266 of the Constitution provide that no money can be spent by the Government from Consolidated Fund of India without authorisation through an Annual Budget presented before the Parliament. Since authorisation under the Appropriation Act is meant for that particular financial year, the same does not allow operationalization of a Public Fund which is non-lapsable in nature. In this regard, separate mechanism is being worked out by Ministry of Finance in consultation with MoD, to explore a special dispensation to MoD to operationalize a Non-lapsable Defence Modernisation Fund.
Defence Expenditure is the largest expenditure amongst the Central Ministries. Defence expenditure as a definite percentage of total Government Expenditure/GDP cannot be ensured considering the fact that the resource allocations are made among various competing priorities on need basis. The budgetary allocations are optimally utilized and if required, additional funds are sought at Supplementary/RE stage to ensure that urgent & critical capabilities are acquired without any compromise to operational preparedness of Defence Services.
This information was given by Raksha Rajya Mantri Shri Ajay Bhatt in a written reply to Dr Amar Singh in Lok Sabha today.