The Armed Forces Flag Day or the Flag Day of India is a day dedicated towards collection of funds from people of India for the welfare of the Indian Armed Forces personnel. It has been observed annually in India on December 7 since 1949. Over the years, it has become a tradition to commemorate this day as an honour to the soldiers, airmen and sailors of India.
The Flag day is mainly observed to serve three basic purposes
Rehabilitation of battle casualties
Welfare of serving personnel and their families
Resettlement and welfare of ex-servicemen and their families.
The Armed Forces Flag Day commemoration and the collection of funds through distribution of flags. It is a time for Indians to express its gratitude and appreciation to the current and veteran military personnel of India and to acknowledge those who died in service to the country.
On the Flag Day all three branches of the Indian armed forces, the Indian Army, the Indian Air Force and the Indian Navy, arrange a variety of shows, carnivals, dramas and other entertainment programmes to showcase to the general public the efforts of their personnel to ensure national security. Throughout the country small flags and car flags in red, deep blue and light blue colours representing the three Services are distributed in return for donations.
Flag Day Fund

The original Flag Day Fund was set up in 1949, by the Defence Minister's Committee. In 1993, the Defence Ministry of India consolidated related welfare funds into a single Armed Forces Flag Day fund. Those funds include,
Amalgamated Special Fund for War Bereaved, War Disabled and other ex-Servicemen/Serving Personnel
Flag Day Fund
St Dunstan's (India) and Kendriya Sainik Board Fund
Indian Gorkha Ex-Servicemen's Welfare Fund.
Fund collection[edit]
The fund collection is managed throughout the country by the by local arms of the Kendriya Sainik Board (KSB), which is part of the Ministry of Defence. The fund collection is organised both by official and non-official means through voluntary organisations.
The Fund is operated by a Managing Committee presided over by the Defence Minister of India at the Centre and by the executive heads of the governments in the States and Union Territories. When the Armed Forces Flag Day programme was introduced, the fund allocation was managed in such a way that the Central KSB headquarters is given only a very small share of the Flag Day Fund collections made by each state. The allotted funds for the KSB is only half a paisa per individual in the state.
Immediately after India achieved independence, a need arose for the government to manage the welfare of its defence personnel. On August 28, 1949, a committee set up under the defence minister decided to observe a Flag Day annually on December 7. The idea behind observing a Flag Day was to distribute small flags to the general population and in return collect donations. Flag Day gains more significance as it considers that it is the responsibility of the civilian population of India to take care of the families and dependents of the armed forces personnel who fight for the country.
Jawaharlal Nehru, who was then Prime Minister of India, on December 7, 1954 said
A few weeks ago, I visited Indo-China and saw our officers and men attached to the International Commission there. It gave me a thrill to see their smart bearing and the good work they were doing in that distant land. What pleased me still more was their general popularity with the people there. By their efficiency as well as their friendliness, they enhanced the reputation of India. Among them were people from all parts of India. They observed no provincial or other differences amongst themselves. I am sure my countrymen will be pleased to learn of them and would like to indicate their appreciation of these young men who serve our country both here and elsewhere so well. A way to indicate that appreciation is to contribute to the Flag Day Fund.
http://en.wikipedia.org/wiki/Armed_Forces_Flag_Day
http://en.wikipedia.org/wiki/Flag_Day_(United_States)