States unhappy with govt plan to create defence fund out of central tax pool: Report

The states have communicated their concerns about the defence fund to the Fifteenth Finance Commission, which will soon release its report on devolution of funds

Several states are worried about the Centre's proposal to create a non-lapsable defence fund out of the divisible pool of central taxes.

The states have communicated their concerns to the Fifteenth Finance Commission, which will soon release its report on devolution of funds, The Economic Times reported.

States such as Andhra Pradesh, Telangana, Madhya Pradesh and Odisha have expressed discontent over proposal to create the defence fund, the report said.

Moneycontrol could not independently verify the story.

The states are of the view that the funds for defence should come from the  Consolidated Fund of India (CFI) since it is the central government's responsibility, The Economic times reported.

According to the report, the Andhra Pradesh government pointed out that defence was a part of the Union List of the Seventh Schedule of the Constitution.

The Telangana government expressed a similar opinion and said the funds should come from the CFI, and not from the divisible pool of central taxes, the report added.

Many states also opposed the move to bring the union territory of Jammu and Kashmir under the scope of the Finance Commission, calling it a deviation from constitutional provisions under Article 280, the report said.