The cabinet committee on security headed by Prime Minister Narendra Modi approved the scheme which will be implemented from fiscal 2018 to 2020.
"This is the biggest ever internal security scheme in the country. The financial outlay for the scheme over the three-year period is Rs 25,060 crore, out of which the central government's share will be Rs 18,636 crore and the states' share will be Rs 6,424 crore," Mr Singh told reporters in New Delhi.
Some of focus points of the internal security scheme include buying better weapons, hiring helicopters, upgrading police wireless equipment and running a criminal tracking network.
Mr Singh said a central budget of Rs 10,132 crore has been earmarked for internal security-related expenditure for Jammu and Kashmir, northeastern states and those affected by left-wing extremism or LWE.
"It is expected that the umbrella scheme... will go a long way to boost the capability and efficiency of central and state police forces by modernising them," Mr Singh said.
A scheme for special central assistance for 35 districts worst hit by LWE carries an outlay of Rs 3,000 crore, while Rs 100 crore has been earmarked to upgrade police and run training and investigation institutes in northeastern states.
Rajnath Singh said a national database of crime and criminal records will be set up and every police station will be linked to it. Other crime-fighting agencies such as forensic science laboratories and jails will also be linked with this database, he said.
An advanced forensic science laboratory will be built in Amravati, and Jaipur's Sardar Patel Global Centre for Security, Counter Terrorism and Anti Insurgency will be upgraded, Mr Singh said, adding the Gujarat Forensic Science University in Gandhinagar will also see improvements under the scheme.
(With inputs from PTI)