Defending India: Defence ministry, finance commission discuss the issue of separate funding


Defending India: Defence minister Rajnath Singh today held consultations with the members of the finance commission for creating a separate funding mechanism to ensure the country’s internal and external security. In the high-level meeting, Rajnath Singh and senior defence ministry officials apprised the members of the 15th finance commission about the ministry’s funding requirements for the next five years, beginning from 2020.

NK Singh, chairman of the 15th finance commission along with other members of the commission visited the South Block to hear the views of the ministry after the Union government changed the terms of reference of the finance commission to explore setting up a separate funding mechanism for the country’s security. As per the present system, the Union government is responsible for defending the country’s from external aggression while state’s are responsible for maintaining the law and order in their jurisdiction.

Creation of a separate fund is expected to reduce the burden on the Centre’s finances as the constitutional body may assign a separate fund from the divisible pool of taxes that is collected by the Union government but is divided between the Union and states.  

During the meeting, ministry of defence gave its fund projection requirement for the period FY 2020 to 2025 which is also the award period of the 15th Finance Commission.

The Ministry informed the Commission about the allocated budget for MoD in comparison to the projections made.

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Senior officials of defence ministry apprised the Commission that it was exploring a number of alternative sources of funding.

“The Finance Commission assured MoD that it would take into consideration all the suggestions made that would help to increase the overall capital space of the Ministry, bring about predictability and help the Ministry in its defence preparedness,” said the government in a statement.

Rajnath Singh, NK Singh, Finance Commission, Defence Ministry

15th finance commission chairman NK Singh (R) with Rajnath Singh.

In late July, ministry of finance amended terms of reference for the 15th finance commission to explore a separate mechanism for ensuring the country’s security. A new paragraph 9A was inserted in the terms of reference following an order by the President.

“The Commission shall also examine whether a separate mechanism for funding of defence and internal security ought to be set up, and if so, how such a mechanism could be operationalised,” said the amended terms of reference.

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Under Article 282 of Indian Constitution, President is required to constitute a finance commission every five years to decide the division of money between the states and the centre. The finance commission recommends the formula for dividing the money between the centre and states and among states themselves from the central taxes according to their population and developmental needs.

However, this is for the first time that the Union government has asked the constitutional body to explore a separate funding mechanism for security forces.

The high level meeting was attended by Admiral Karambir Singh, Chief of Naval Staff; Dr Ajay Kumar, Defence Secretary; Subhash Chandra, Secretary (Defence Production); Sanjeevanee Kutty, Secretary (Ex-Serviceman Welfare); Dr. G Satheesh Reddy, Secretary, Department of Defence R&D and Chairman, DRDO; Gargi Kaul, Secretary (Defence Finance); Lt Gen Devraj Anbu, Vice Chief of Army Staff; Air Marshal RKS Bhadauria, Vice Chief of Air Staff and Krishnaswamy Natarajan, Director General, Coast Guard, and other senior officials of MoD.

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