How the sale of defence land can help in creating a new fund for military modernisation

ET has learnt that the finance ministry has proposed that the fund be initially created with the proceeds of monetisation of defence land. This would involve identifying surplus land available with the armed forces, especially in urban areas where several large such holdings exist.

As reported earlier, the three services have been allocated significantly lower budgets this year than their projected expenditure which is likely to impact modernisation plans. There was a Rs 1.24 lakh crore gap this year between what the armed forces projected as expenses and the allocation given by the finance ministry.

Another restriction on the fund proposed by the finance ministry is that it be used only after the annual budgetary grant given to the armed forces has been exhausted. Further, the ministry has proposed that in case the money in the non-lapsable fund is not used for three years, it be sent back to the Consolidated Fund of India.

The non-lapsable fund would be used to procure defence equipment for the armed forces under the Make in India initiative and for certain works like the creation of family accommodation for personnel under the Married Accommodation Project.