For the first time, the terms of reference given to the Finance Commission of India included the aspect of fund allocation for modernisation of defence forces (capital outlay for defence forces, minus allocation for land and works) and the internal security apparatus. Accordingly, the report submitted by the Fifteenth Finance Commission, covering the period 2021-2026, includes a chapter (Chapter 11) on the subject, with some key recommendations. The main recommendation is to constitute a dedicated, non-lapsable, Modernisation Fund for Defence and Interanal Security (MFDIS), under the Public Accounts of India, with standard reporting and audit requirements. The chapter has delineated the fund requirements for internal security, to be managed by the Ministry of Home Affairs.
https://www.orfonline.org/expert-speak/non-lapsable-fund-for-indias-defence-modernisation/
