Government wants Defence to generate non-lapasable fund from sale of its assets

The government wants to use the proceeds from the sale of stakes in defence public sector enterprises, and from the sale of surplus defence land for setting up a non-lapsable Defence Fund, sources tell CNBC-TV18.

The defence ministry is expecting Rs 5000 crore annually from defence PSU stake sales and Rs 18,000 crore over five years from land sales, the 15th Finance Commission has observed in its report.

The government is not in favour of the 15th Finance Commission’s recommendations that Rs 1.5 lakh crore from the Consolidated Fund be transferred to the Defence Fund over five years.

Already, the Finance Commission has cut grants by the Centre to the states by 1 percent, to help the Centre raise Rs 1.53 lakh crore for the Defence Fund.