New Delhi. In a move aimed at lessening the burden on its financial resources, the Army asked the Defence Ministry to remove the allocation for the Ex-Servicemen Contributory Health Scheme (ECHS) from its budget and move it under the defence pension fund, which is a separate entity within the defence budget.

The government made funding of the medical scheme for retired personnel as part of the army’s revenue budget from this fiscal year. While the purpose of making the change was for better management of the scheme, the resources needed are immense and could put pressure on the army’s procurement plans, officials said.

The ECHS was allocated about Rs 3,000 crore less than what it had sought for the current fiscal year. The biggest challenge of the scheme is that its funds are not growing proportionately to the population it is serving.

Due to periodic revision of pensions, the pension fund saw high growth and bringing the ECHS under it will ensure that the scheme has adequate funds all times, the sources said. If the ECHS funding is shifted to the defence pension budget, it will not put pressure on the army’s revenue budget.

The developments come in the backdrop of the ECHS regularly facing a shortage of funds, leading to a dearth of medicines, especially critical life-saving ones, for the more than 50 lakh veterans and their dependants.

For the ongoing financial year, the ECHS had projected a requirement of about Rs 6,000 crore, but was given only about Rs 3,200 crore, almost the same as the previous year. Officials said this fund would be inadequate to meet requirements, because the ECHS had a committed liability of Rs 2,000 crore for the payment of hospital bills for the previous financial year. It has also used up its vote-on-account budget, which was 33% of the total funds allocated for the year, during the first few months itself. This will leave very little funds with it and could result in a shortage of medicines later, they said.