Restructing Of Defence Financing By – Rajnath Singh Government
The 15th Finance Commission, headed by NK Singh was constituted on November 27, 2017 and is to submit its recommendations on October 30 this year for a five-year plan period starting April 1, 2020.
Doing away with the cosmetic changes and patchworks, there is going to be a major change in how government allocates funds for national security. The Union Cabinet has now asked the Finance Commission to consider allocation of “adequate, secure and non-lapsable” funds for defence and internal security. It also extended the term of the Fifteenth Finance Commission by a month to November.
The decision underscores the Union Government’s emphasis on national security which, Prime Minister Narendra Modi, Defence Minister Rajnath Singh and Union Home Minister Amit Shah have emphasized, as one of their primary areas of focus. The Finance Commission has been asked to examine a separate mechanism for funding of defence and internal security. It will be set up, and will be operationalised.
If the recommendations made by the Finance Commission — which is constituted under Article 280 of the Constitution — are accepted, it will fundamentally alter the funding mechanism for defence and internal security.
The new mechanism is expected to ensure an assured allocation of resources towards defence and internal security imperatives. The new amended Terms of Reference will enable the Finance Commission to “address serious concerns regarding the allocation of adequate, secure and non-lapsable funds for defence and internal security of India”, a government statement said.
The extension of the term will allow the Commission to “examine various comparable estimates for financial projections in view of reforms and the new realities to finalise its recommendations for the period 2020-2025. It has been given in the “backdrop of various major fiscal/ budgetary reforms” brought in by the Government, replacement of the Planning Commission with NITl Aayog, removal of distinction between Non-Plan and Plan expenditure, advancing the budget calendar by one month, introduction of GST, and a new Fiscal Responsibility and Budget Management architecture.
The step gives the Finance Commission the mandate to give recommendations on security funding. The Commission has so far focused exclusively on arriving at the optimum formula for the distribution of funds between the Centre and the states. Besides this, it also reviews the status of government finances, fiscal deficit, debt levels and recommends a fiscal consolidation roadmap at both the Central government and state levels.
