The Assam Fiscal Responsibility and Budget Management (Amendment) Act, 2005

Registered No. - 768/97
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THE ASSAM GAZETTE
EXTRAORDINARY
S IT 'S  ’^ T  SHCHo
PUBLISHED BY AUTHORITY
-R 188 1^*1^, W W  17 C T ’ , 2005, 27 W T  1927 (*Rs.) 
No. 188 Dispur, Tuesday, 17th May, 2005, 27th Vaisakha, 1927 (S.E.)
GOVERNMENT OF ASSAM
ORDERS BY THE GOVERNOR
LEGISLATIVE DEPARTMENT :  :  LEGISLATIVE BRANCH
NOTIFICATION
The 17th May, 2005
No. LGL.59/2005/13.—  The following Act of the Assam Legislative 
Assembly which received the assent of the Governor is hereby published for 
general information.

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1506 T H E  A S S A M  G A Z E T T E , E X T R A O R D IN A R Y , M A Y  17, 2005
A S S A M  A C T  N O . X X V II O F 2005
(R ec eiv ed  th e assen t o f  the G o v e rn o r on 13th M ay, 2005
THE ASSAM FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT. 2005  
AN
ACT
to provide for the responsibility of the State Government to ensure fiscal stability, sustainability, 
improve efficiency and transparency in management of the public finances of the State, enhance 
the availability of resources by achieving sufficient revenue surplus, reduce fiscal deficit and 
remove the impediments to effective conduct of fiscal policy and prudent debt management for 
improving the social and physical infrastructure and human development in the State.
Be it enacted by Assam legislative Assembly in the Fifty sixth Year of the Republic of India as 
follows
1. Short title, extent and commencement.-
(1) This Act may be called The Assam Fiscal Responsibility and Budget Management 
Act, 2005.
(2) It extends to the whole of Assam.
(3) It shall come into force on such date as the State Government may, by notification in 
the Official Gazette, appoint.
2. Definitions.- In this Act, unless the context otherwise requires,-
(a) “Administrative Approval” means authority to create liability and I or incur 
expenditure;
(b) “Annual budget” means the annual financial statement laid before the State 
Legislature under article 202 of the Constitution;
(c) “Appointing Authorities” means officers of the State Government exercising the 
delegated authority of appointing persons to the posts under the State Government;
(d) “Current Year” means the year preceeding the year for which the budget and the Five 
Year Fiscal Plan (FYFP) are being presented;
(e) “Financial Year” means the year beginning on the 1 st April and ending on the 11 st day 
of March of the following calendar year;
(f) “Fiscal Deficit’  means the excess of aggregate disbursements (net of debt 
repayments) from the Consolidated Fund of the State over revenue receipts, recovery 
of loans and non-debt capital receipts during a financial year;
Explanation: For the purpose of calculation of Fiscal Deficit, boirowings by the Public 
Sector Undertakings and Special Purpose Vehicles and other equivalent instruments 
where liability for repayment is on the State Government, are to be treated as the 
borrowings of the State Government.
*  A
(g) “Plan Outlay” means the annual aggregate plan for the State for a financial year as 
approved by the Planning Commission of the Government of India;

THE ASSAM GAZETTE, EXTRAORDINARY, MAY 1  7, 2005 1507
(h) “Fiscal Indicators” means such figures, proportions, percentages as -nay be 
prescribed, for evaluation of the fiscal position of the State Government;
(i) “Prescribed” means as prescribed by the rules made under this Act;
(j) “Previous Year” means the year preceeding the current year;
(k) ‘Revenue deficit’  means the excess of the revenue expenditure over the revenue 
receipts in a financial year;
Explanation: For the purpose of this clause, interest payment by the State Government 
towards the borrowings by the Public Sector Undertakings, Special Purpose Vehicles or 
any other equivalent instruments where the liability for repayment is on the Government, 
shall be treated as revenue expenditure.
(l) “Revenue Surplus” means the excess of revenue receipts over the revenue 
expenditure;
(m) “Sanctioned Post” means the posts which were created by a sanction of,the State 
Government and has not been subsequently abolished or kept in abeyance by an order 
of the State Government;
(n) “State Government” means the Government of Assam;
(o) “Finance Department” means the Finance Department of the Government of Assam;
(p) “Total Liabilities” means liabilities upon the Consolidated Fund of the State and 
Public Account of the State.
3. The Five Year Fiscal Plan to be laid before the Legislature. - (1) The State Government 
shall in each financial year, lay before the State Legislature a Five Year Fiscal Plan 
along with the Annual Budget.
(2) The Five Year Fiscal Plan shall set forth a five year rolling target for the prescribed 
fiscal indicators with specifications of underlying assumptions.
(3) In particular and without prejudice to the provisions contained in sub-section (2), the 
Five Year Fiscal Plan shall include an assessment of sustainability relating to,-
(i) balance of revenue receipt and revenue expenditure,
(ii) the use of capital receipts including borrowings for creating productive assets.
(4) The Five year Fiscal Plan shall, inter alia, contain, -
(a) the Medium Term Fiscal Objectives of the State Government;
(b) an evaluation of the fiscal indicators in the previous year vis-a-vis the target 
set out earlier and the likely performance in the current year as per revised 
estimates;
(c) a statement on recent economic trends and future prospects for growth and 
development affecting the fiscal position of the State Go vernment;
(d) the strategic priorities of the State Government in the fiscal area for the 
ensuing financial year;
(e) policies of the State Government for the ensuing Financial year relating to tax 
and non-tax revenue, expenditure, subsidies (including grants to Public Sector

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1508 THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 2005
Undertakings, grants-in-aid to Non- Government Organizations), borrowing 
and other liabilities, lending and investments, Government guarantees to 
Public Sector Undertakings with key fiscal measures ar.d targets relating to 
each of these;
(f) an evaluation as to how the current policies of the State Government are in 
conformity with the fiscal management principles set out in section (4) and the 
fiscal objectives set out in the Five Year Fiscal Plan.
(5) The Five Year Fiscal Plan shall be in such form as may be prescribed.
4. Fiscal Management Principles. - (1) The State Government will, be guided by following 
fiscal management principles:-
(a) manage expenditures consistent with the revenue generated;
(b) maintain Government debt at prudent level;
(c) manage guarantees and other contingent liabilities prudently with particular reference 
to the quality and level of such liabilities;
(d) ensure that the policy decisions of the Government have due regard to the financial 
implications on the future generations;
(e) ensure that the borrowings are used for productive assets and accumulation of capital 
assets and are not applied to finance revenue expenditures;
(f) ensure a reasonable degree of stability and predictability in the level of tax burden;
(g) maintain the integrity of the tax system by minimizing special incentives, concessions 
and exemptions;
(h) pursue tax policies with due regard to economic efficiency and compliance costs;
(i) pursue non-tax policies with due regard to cost recovery and equity;
(j) pursue expenditure policies that would provide impetus to economic growth, poverty 
reduction and improvement in human welfare;
(k) build up a revenue surplus for use in capital formation and productive expenditure;
(l) ensure maintenance of the physical assets of the Government;
(m) maintain transparency by disclosing sufficient information to allow public to 
scrutinize the state of the public finances;
(n) ensure best possible uses of the Government resources and public assets;
(o) minimize the fiscal risk associated with management of public sector undertakings 
and the utilities providing public goods and services;
(p) ensure discharge of cunent liabilities in a timely manner;
(q) formulate a realistic budget with due regard to the general economic outlook and 
revenue prospects and minimize deviations during the course of the year.
(2) The State Government shall take appropriate measures to eliminate revenue deficit 
and contain fiscal deficit at a sustainable level and build up adequate revenue surplus.
(3) In particular and without prejudice to the generality of the foregoing provisions, the 
State Government shall,-

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(i) eliminate revenue deficit within five financial years beginning on the 1st day 
of April 2005 and ending on the 31 s 1 day of March 2010;
(ii) reduce the revenue deficit as a percentage of Gross State Domestic Product 
(GSDP) in each of the Financial year beginning 1 st day of April 2005, in a 
manner consistent with the target set out in clause ( i ) above;
Explanation: For the purpose of calculation of the revenue deficit vis-a-vis the target set 
for any year, due adjustments will be made to cover the shortfall in the current transfers 
from the Centre, including devolution of the State’s share of Central taxes, with reference 
to the budgetary provision of the year.
(iii) by the year 2010 the expenditure on account of salary and wages of the 
employees of the State Government will be contained within 60% of the total 
tax and non-tax revenue of the State Government, including devolutions from 
the Government of India but excluding the grants under the Annual Plan from 
the Planning Commission and other developmental grants;
(iv) restrict the revenue expenditure under Annual state plan to one third of the 
Plan outlay in a financial year with a view to making more fund available for 
capital and developmental expenditures;
Explanation: For the purpose of computation of revenue expenditure, any grant given for 
capital expenditure will be excluded but any loan given for revenue expenditure will be 
included.
(v) reduce fiscal deficit to 3% of the estimated Gross State Domestic Product within 
a period of five financial years beginning on the 1 st day of April 2005 and 
ending on 31st day of March 2010;
(vi) reduce fiscal deficit as percentage of the estimated Gross State Domestic 
Product in each of the financial year beginning on 1 st day of April 2005, in a 
manner consistent with the goal set out in clause (v) above;
(vii) restrict the total debt stock of the State Government including the Government 
Guarantee to 45% of the GSDP of the previous year at current prices within a 
period of five years beginning on the 1st day of April, 2005;
(viii) State Government Guarantee for the loans contracted by Public Sector 
Undertakings, Boards, Companies, Corporations, Cooperative societies or 
Autonomous organizations under the State Government, shall be restricted at 
any point of time to fifty percent of State’s own tax and non-tax revenue of the 
previous year or five percent of the GSDP of previous year at current prices, 
whichever is lower:
Provided that revenue deficit and fiscal deficit may exceed the limits specified under this 
sub-section on the ground or grounds of unforeseen demands on the finances of the State 
Government arising out of internal disturbance or natural calamity or such other exceptional 
grounds as the State Government may specify:

1510 THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 200k
Provided further that the ground or grounds specified in the first proviso shall be placed 
before the State Legislature, as soon as may be, after such deficit amount exceeded the aforesaid 
limit.
5. Measures for Fiscal Transparency.- (1) The State Government snail take measures to
ensure greater transparency in its fiscal operations in public interest.
(2) The State Government shall take measures to simplify the format of the Annual Financial 
Statement.
(3) The State Government shall at the time of presentation of the Annual Budget disclose in a 
statement in the form as may be prescribed:
(a) the key fiscal indicators including those mentioned in Section 4 (3);
(b) the significant changes in the accounting standards, policies and practices 
likely to affect the computation of the fiscal indicators;
(c) as far as practicable and consistent with public interest, the contingent 
liabilities of State Government created by way of guarantee, actual liabilities 
arising out of borrowings giving the outstanding amounts of principal, interest 
and also the outstanding liabilities in respect of works and supplies under each 
Department.
(4) The State Government shall codify at one place the existing rules and procedures for issue of 
administrative approval, financial sanction, procurement of goods and services, award of 
work and contract in government transactions and, if necessary, bring about such 
amendments therein, to ensure greater transparency in such transactions.
6. Measures to enforce compliance.- (1) The Annual Budget and the policies announced at the
time of presentation of the budget shall be consistent with the objectives and target set in the 
Five Year Fiscal Plan.
(2) The Finance Minister shall be responsible for preparation of the Annual Financial Statement 
which is to be laid before the State Legislature under Article 202 of the Constitution of India 
after due consideration of and consultation, as may be necessary, on the proposals received 
for the purpose.
(3) Proposals for Supplementary or Additional demands for grants placed before the State 
Legislature shall be accompanied with a statement of their impact on the fiscal indicators as 
disclosed at the time of presentation of the Annual Financial Statement under Section 5  (3) of 
this Act.
(4) The Department of Finance shall review every year the trends in receipts and expenditure 
including the fiscal indicator targets set for the current financial year and place before the 
State Legislature a statement containing the outcome of such reviews.
(5) The statement, inter alia, shall contain,-

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(a) any deviation in meeting the obligation and target cast on the State 
Government;
(b) whether such deviation is substantial or relates to actual or potential 
budgetary outcomes and how much of the deviation can be attributed to the 
general economic scenario;
(c) gny remedial measures the State Government proposes to take.
7. Measures to ensure Fiscal Discipline.- (1) With a view to ensuring timely discharge of 
current liabilities, especially payment of salaries to the employees, -
(a) the State Government or the appointing authorities under it shall give 
appointments only against a sanctioned post which is vacant and in 
accordance with the laid down Rules, procedures and orders;
Explanation: The appointing authorities under this clause shall include the appointing 
authorities of the autonomous bodies including Public Sector Undertakings, Companies, 
Statutory Bodies, Trusts, Societies and Cooperatives Societies under the State 
Government.
(b) notwithstanding any other provision contained in any Act or Rules, no new 
post shall be created in any department of the State Government or in 
Autonomous bodies including Public Sector Undertakings, Companies, 
Statutory Bodies, Trusts, Societies and Cooperatives Societies, which are 
under the State Government, without the prior concurrence of the Finance 
Department;
(c) no appointment shall be made by the State Government or the appointing 
authorities under it in the vacancies arising out o f transfer and leave of the 
incumbents in these posts;
(d) no appointment shall be made by the State Government or the appointing 
authorities under it, in a post in anticipation of it’s falling vacant in future;
(e) the State Government or the appointing authorities under it shall not make 
more than one appointment against one vacant post;
(f) any letter of appointment to any vacant sanctioned post shall clearly indicate 
the identity of the post in the manner as may be prescribed;
(g) notwithstanding any other provision contained in any Act or Rules, the select 
list prepared for the fresh appointments to vacant sanctioned posts shall 
contain names equal to the number of vacant posts notified at the time of 
calling for applications for filling up the posts.
(2) Before awarding any work or starting a construction work or awarding an order of supply 
of goods and services which create liability on the Consolidated Fund of the State, the 
State Government or the authorities exercising delegated financial powers shall fust issue 
administrative approval or financial sanction, for the work or the order of supply as the 
case may be, in compliance with the existing Rules, procedures and guidelines and 
further Rules, procedures and guidelines that may be prescribed from time to time.

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(3) Each Department shall maintain a register of works and order of supplies of goods and 
services, liabilities incurred against these works and orders of'supplies, liabilities cleared 
and liabilities awaiting clearance, in a format as may be prescribed:
Provided that the Government may make Rules not to sanction new work if the 
outstanding liabilities in a Department exceed a limit as may be prescribed.
8. Offences and Penalties. - (1) Whoever violates any one or more of the provisions of section
7 shall commit an offence which shall be punishable with rigorous imprisonment for a 
term which may extend to three years.
(2) Whoever causes financial loss to the State Government, willfully and with malafide 
intention, by under assessment and/or under realization of revenue due to the State 
Government and/ or by incurring unauthorized expenditure shall commit an offence 
which shall be punishable with rigorous imprisonment for a term which may extend to 
three years and/or recovery of the amount of financial loss caused to the State 
Government with interest.
(3) A person who abets any of the offences as aforesaid shall be liable for the same 
punishment as provided for the offence.
(4) Not withstanding anything contained in Code of Criminal Procedure, 1973 the 
offences committed under this Act shall be treated as cognizable offences.
(5) Offences under this Act shall be triable by a Magistrate not lower in rani: than of a 
Judicial Magistrate of 1 st class.
9. Power to make rules.- (1) The State Government may, by notification in the Official Gazette
make rules for carrying out the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing provision such rules 
may provide for all or any of the following matters, namely: -
(i) The fiscal indicators to be prescribed for the "purpose of sub-section (2) of 
section 3 and clause (a) of sijib section (3) of section 5;
(ii) The format of Five Year Fiscal Plan as referred to in sub-section (5) of section 
3 and sub section (3  ) of section 5;
(iii) Any other matter which is required to be, or may be, prescribed;
(3) All rules made by the State Government under this Act shall, as soon as may be after they 
are made, be laid before the State Legislature, while it is in session for a total period of not 
less than fourteen days, which may be comprised in one session or two or more successive 
sessions, and shall unless some later date is appointed, take effect from the date of their 
publication in the Official Gazette subject to such modifications or annulments as the 
Legislature may, during the said period agree to make, so however, that any such 
modification or annulment shall without prejudice to the validity of anything previously 
done thereunder.

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10. Protection of action taken in good faith. - No suit, prosecution or other legal proceedings 
shall lie against the State Government or any officer of the State Government for anything 
which is done or intended to be done in good faith under this Act or Rules made thereunder.
11. Application of other laws not barred. - The provision of this Act shall be in addition to and 
not in derogation of the provisions of any law for the time being in force.
12. Power to remove difficulties. -  (1) If any difficulty arises in giving effect to the provisions 
of this Act, the State Government may by orders published in the Official Gazette, make such 
provisions not inconsistent with the provisions of this Act, as may appear to it to be 
necessary or expedient for removing the difficulty:
Provided that no such order shall be made after the expiry of a period of two years 
from the date of commencement of this Act
(2) Every order made under this section shallbe laid as soon as may be after it is made before 
the State Legislature.
M O H D . A. H A O U E , 
Secretary to the G ovt, o f A ssam ,  
L egislative D epartm ent, Dispur.
GUWAHATI- Printed & Published by the Dy. Director (P&S), Directorate of Ptg. & Sty., 
Assam, Guwahati-21, (Ex-Gazette) No.375-500-600-1000-17-5-2005.

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