LexThe Himachal Pradesh Fiscal Responsibility and Budget Management Act, 2005
Himachal Pradesh · state statute
Open in Lexace · Ask the AI about this actTHE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND
BUDGET MANAGEMENT ACT, 2005
ARRANGEMENT OF SECTIONS
Sections:
CHAPTER-I
PRELIMINARY
1. Short title and commencement.
2. Definitions.
CHAPTER-II
LAYING OF MEDIUM TERM FISCAL PLAN IN THE
LEGISLATIVE ASSEMBLY, FISCAL MANAGEMENT
PRINCIPLES AND TARGETS AND MEASURES TO
ENFORCE COMPLIANCE
3. Medium term fiscal plan to be laid before the Legislature.
4. Fiscal management principles.
5. Fiscal management targets.
6. Measures for fiscal transparency.
7. Measures to enforce compliance.
8. Powers to make rules.
9. Rules to be laid before the Legislature.
10. Protection of action taken in good faith.
11. Application of other laws not barred.
12. Power to remove difficulties.
_______________
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND
BUDGET MANAGEMENT ACT, 2005
(ACT NO. 14 OF 2005)1
(Received the assent of the Governor, Himachal Pradesh on 20 th
April, 2005 and was published both in Hindi and English in the Rajpatra,
Himachal Pradesh (Extra-ordinary), dated 21st April, 2005, pp. 465-478.)
An Act to provide for the responsibility of the State Government to
ensure prudence in fiscal management and fiscal stability by
progressive reduction of revenue deficit and debt management
1. Passed in Hindi by the Himachal Pradesh Vidhan Sabha . F or Statement of
Objects and Reasons, see the Rajpatra, Himachal Pradesh (Extra-ordinary), dated
14th March, 2005, pp. 4093 and 4100.
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
2
consistent with fiscal stability, greater transpar ency in fiscal
operations of the State Government and conduct of fiscal policy in
a medium term fiscal framework and for matters connected
therewith or incidental thereto.
Amended, repealed or otherwise affected by:-
(i) H.P. Act No. 26 of 2005 1, assented to by the Governor on the
6th September, 2005, published both in Hindi and English in
the Rajpatra, Himachal Pradesh (Extra-ordinary), dated 8 th
September, 2005, p p. 2949-2954, effective from 21st June,
2005.
(ii) H.P. Act No. 25 of 20112 assented to by the Governor on 31 st
March, 2011, published both in Hindi and English in the
Rajpatra, Himachal Pradesh, dated 2nd April, 2011, pp. 43-45.
(iii) H.P. Act No. 4 o f 20213, assented to by the Governor on the
19th April, 2021, published both in Hindi and English in the
Rajpatra, Himachal Pradesh (e -Gazette), dated 23rd April,
2021, pp. 419-421, effective from 1st January, 2020.
(iv) H.P. Act No. 15 of 20224 assented to by the Governor on the
29th September, 2022, published in the Rajpatra, Himachal
Pradesh (e-Gazette), dated 10th October, 2022, pp. 5529-5531.
(v) H.P. Act No. 1 o f 20235 assented to by the Governor on the
24th January, 2023, published in the Rajpatra, Himachal
Pradesh (e-Gazette), dated 30th January, 2023, pp. 9583-9586.
BE it enacted by the Legislative Assembly of Himachal Pradesh in
the Fifty-sixth Year of the Republic of India, as follows:-
CHAPTER-I
PRELIMINARY
1. Short title and commencement.- (1) This Act may be called the
Himachal Pradesh Fiscal Responsibility and Budget Management Act, 2005.
1. Passed in the Himachal Pradesh Vidhan Sabha and for Statement of Objects and
Reasons, see the Rajpatra, Himachal Pradesh (Extra-ordinary), dated 9 th August,
2005, pp. 2315 and 2320.
2. Passed in Hindi by th e Himachal Pradesh Vidhan Sabha . For Statement of
Objects and Reasons see the Rajpatra, Himachal Pradesh, dated 29th March, 2011,
pp. 10541-10542 and 10543-10544.
3. Passed in Hindi by the Himachal Pradesh Vidhan Sabha/ For Statement of
Objects and Reasons see the Rajpatra, Himachal Pradesh (e -Gazette),dated the
17th March, 2021, pp. 9289 and 9290-9291
4. Passed in Hindi by the Himachal Pradesh Vidhan Sabha. For Statement of
Objects and Reasons see t he Rajpatra, Himachal Pradesh (e -Gazette), dated 18th
August, 2022, pp. 3736 and 3737.
5. Passed in Hindi by the Himachal Pradesh Vidhan Sabha. For Statement of
Objects and Reasons see t he Rajpatra, Himachal Pradesh (e-Gazette), dated 6th
January, 2023, pp. 8684 and 8686.
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
3
(2) It shall come into force on such date 1 as the State Government
may, by notification in the Official Gazette, appoint.
2. Definitions.- In this Act, unless the context otherwise requires,-
(a) “budget” means the Annual Financial Statement laid bef ore
the St ate Legislative Assembly under a rticle 202 of the
Constitution ;
(b) “current year” means the financial year preceding the ensuing
year;
(c) “debt receipt” shall have the same meaning as used in the
finance accounts of the State by Comptroller a nd Auditor
General;
(d) “ensuing year” means the financial year for which the budget
is being presented;
(e) “financial year” means the year commencing on the first day
of April;
(f) “fiscal indicators” means the numerical ceilings and
proportions to gross state domestic product, of such measures,
as may be prescribed, for evaluation of the fiscal position of
the State Government;
(g) “fiscal deficit” means the excess of total disbursements from
the Consolidated Fund of the State, excluding repayment of
debt, over total receipts into the Consolidated Fund,
excluding the debt receipts, during a financial year;
Explanation.- For the purpose of calculation of fiscal deficit,
borrowings by Public Sector Undertakings and Special
Purpose Vehicles and other equiv alent instruments,
where the liability for repayment is on the State
Government are to be treated as borrowings of the State
Government;
(h) “prescribed” means prescribed by the rules made under this
Act;
(i) “revenue deficit” means the difference betwe en revenue
expenditure and revenue receipts;
(j) “State” means the State of Himachal Pradesh; and
(k) “State Government” means the Government of Himachal
Pradesh.
1. Act came into force from 1st May, 2005 vide Notification No. Fin. Comm. D (4)-
1/2004 dated 12 th May, 2005, published in the Rajpatra, Himachal Pradesh
(Extra-ordinary), dated 13th May, 2005, p. 720.
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
4
CHAPTER-II
LAYING OF MEDIUM TERM FISCAL PLAN IN THE LEGISLATIVE
ASSEMBLY, FISCAL MANAGEMENT PRINCIPLES AND TARGETS
AND MEASURES TO ENFORCE COMPLIANCE.
3. Medium term fiscal plan to be laid before the Legislature. - (1)
The medium term fiscal plan shall include an assessment of sustainability
relating to,-
(a) the balance between revenue receipt s and revenue
expenditures;
(b) use of capital receipts including borrowings for generating
productive assets;
(c) an evaluation of the performance of the prescribed fiscal
indicators in the previous year vis -à-vis the targets set out
earlier, and the like ly performance in the current year as per
revised estimates;
(d) a statement on the recent economic trends and future
prospects for growth and development affecting fiscal
position of the State Government; and
(e) the strategic priorities of the State Go vernment in the fiscal
area for the ensuing financial year.
(2) The medium term fiscal plan shall set forth a four year rolling
target for the fiscal indicators prescribed, with specification of underlying
assumptions.
(3) The State Government shall in eac h financial year lay before the
State Legislative Assembly a medium term fiscal plan alongwith the annual
budget.
(4) The medium term fiscal plan shall be in such form as may be
prescribed.
4. Fiscal management principles.- (1) The State Government shall
take appropriate measures to reduce the revenue deficit and manage the debt
consistent with fiscal stability.
(2) The State Government shall be guided by the following fiscal
management principles, namely: -
(a) to maintain State Government debt at prudent levels;
(b) to manage guarantees and other contingent liabilities
prudently with particular reference to the quality and level of
such liabilities;
(c) to ensure that policy decisions of the State Government have
due regard to their financial implicatio ns on future
generations;
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
5
(d) to ensure a reasonable degree of stability and predictability in
the level of the tax burden;
(e) to maintain the integrity of the tax system by minimizing
special incentives, concessions and exemptions;
(f) to pursue tax p olicies with due regard to economic efficiency
and compliance costs;
(g) to pursue non -tax revenue policies with due regard to cost
recovery and equity;
(h) to ensure that physical assets of the State Government are
properly maintained; and
(i) to discl ose sufficient information to allow the public to
scrutinize the conduct of fiscal policy and the state of public
finances.
5. Fiscal management target s.- 1[(1) In particular and without
prejudice to the generality of the foregoing provisi ons, the State Go vernment
shall-
2[(i) eliminate revenue deficit and maintain revenue surplus
thereafter;]
3[(ii) maintain fiscal deficit of 6 percent or less of Gross State
Domestic Product in the Financial Year 2022 -23, 3.5
percent or less of Gross State Domestic Produ ct in the
Financial Years 2023-24 and 2024-25 and at the level of 3
percent or less of Gross State Domestic Product thereafter:
Provided that interest free loan for a term of fifty
years under the “Scheme for Special Assistance to States
for Capital Expend iture” of the Central Government for
financing infrastructure projects of the State, shall be
allowed over and above all limits specified for fiscal deficit
debt stock:
Provided further that the fiscal deficit may exceed
the prescribed limit if any unutilized borrowing of previous
financial year is carried forward to subsequent financial
year(s);]
4[(iii) reduce outstanding debt to level of such percentage of Gross
State Domestic Product, as may be prescribed; and]
1. Sub-section (1) substituted vide H.P Act No. 26 of 2005, again Sub-sections (1)
substituted vide H.P Act No. 25 of 2011.
2. Clause (i) substituted vide H.P Act No. 1 of 2023.
3. Clause (ii) amended vide H.P. Act No. 4 of 2021, 15 of 2022 and aga in
substituted vide H.P Act No. 1 of 2023.
4. Clause (iii) substituted vide H.P Act No. 1 of 2023.
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
6
(iv) maintain outstanding risk weighted guarantees on long term
debt below forty per cent of total revenue receipt in the
preceding financial year for which actuals are available as per
finance accounts.
1[(2) Notwithstanding anything contained in sub -section (1), the
targets under different par ameters of clauses (i), (ii) and (iii) of sub -section
(1), may be exceeded in case of,-
(a) unforeseen demands on the finances of the State Government
due to reasons of national security or natural calamity
declared by the Central Government or the State Government,
as the case may be; or
(b) due to increase in developmental and other unavoidable
expenditure; or
(c) when increased borrowing limit, if any, is allowed by the
Central Government from time to time:
Provided that a statement in respect of the ground or grounds
specified under this sub -section shall be placed before the Legislative
Assembly, as soon as may be, after such deficit amount exceeds the aforesaid
targets.]
6. Measures for fiscal transparency .- (1) The State Government
shall take suita ble measures to ensure greater transparency in its fiscal
operations in public interest and minimize as far as practicable, secrecy in the
preparation of the annual budget:
Provided that the State Government shall have the power to withhold
any such inform ation, which would adversely affect the interest of the State
Exchequer.
(2) In particular and without prejudice to the generality of the
foregoing provisions, the State Government shall, at the time of presentation
of the annual budget, disclose in a stat ement in the form , as may be
prescribed,-
(a) the significant changes in the accounting standards, policies
and practices affecting or likely to affect the computation of
prescribed fiscal indicators; and
(b) as far as practical and consistent with public interest, the
contingent liabilities created by way of guarantees, the actual
liabilities arising out of borrowings by Public Sector
Undertakings and Special Purpose Vehicles and other
equivalent instruments where liability for repayment is on the
State Government, all claims and commitments made by the
State Government having potential budgetary implications;
1. Sub-section (2) substituted vide H.P. Act No. 25 of 2011, again substituted vide
H.P Act No. 1 of 2023.
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
7
1[(c) the details of number of employees in Government, Public
Sector and Allied Institutions and related salaries.]
7. Measures to enforce complianc e.- (1) The Minister -in-charge of
the Department of Finance shall review, after every six months, the trends in
receipts and expenditure in relation to the budget, and place before the
Legislative Assembly the outcome of such reviews. The review report shall be
in such form as may be prescribed and shall explain,-
(a) any deviation or likely deviation in meeting the obligations
cast on the State Government under this Act;
(b) whether such deviation is substantial and relates to the actual
or the potential budgetary outcomes, and how much of the
deviation can be attributed to general economic environment
and to policy changes by the State Government; and
(c) the remedial measures the State Government proposes to take.
(2) Whenever there is a prospect of either shortfall in revenue or
excess of expenditure over pre-specified levels for a given year on account of
any new policy decision of the State Government that affects either the State
Government or its Public Sector Undertakings, the State Government, prior to
taking such policy decision, shall take measures to fully offset the fiscal
impact for the current and future financial years by curtailing the sums
authorized to be paid and applied from and out of the Consolidated Fund of
the State under any Act enacted by the L egislative Assembly to provide for
the appropriation of such sums, or by taking interim measures for revenue
augmentation, or by taking up a combination of both:
Provided that nothing in this sub -section shall apply to the
expenditure charged on the Consolidated Fund of the State under clause (3) of
article 202 of the Constitution.
2[(3) The State Government may entrust the Comptroller and
Auditor General of India to review, the compliance of the provisions of
this Act in the manner as may be prescribed and such reviews shall be laid
on the table of Legislative Assembly of the State.]
8. Powers to make rules. - (1) The State Government may, by
notification in the Official Gazette, make rules for carrying out the provisions
of this Act.
3[(2) In particular an d without prejudice to the generality of the
foregoing power, such rules may provide for all or any of the following
matters, namely:-
(a) the measures for evaluation of the fiscal position of the State
Government under clause (f) of section 2;
1. Clause (c) inserted vide H.P Act No. 26 of 2005.
2. Sub-section (3) inserted vide H.P Act No. 25 of 2011 and again substituted vide
H.P. Act No. 1 of 2023.
3. Sub-section (2) substituted vide H.P Act No. 26 of 2005.
THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT
ACT, 2005
8
(b) the fiscal indicators under sub-section (2) of section 3;
(c) the form of medium term fiscal plan under sub -section (4) of
section 3;
(d) the form of statements for disclosure under clauses (a), (b)
and (c) of sub-section (2) of section 6; and
(e) the form of review report under sub-section (1) of section 7.]
9. Rules to be laid before the Legislature.- Every rule made under
this Act shall be laid , as soon as may be after it is made, before Legislative
Assembly, while it is in session, for a total period of 14 days, which may be
comprised in one session or in two or more successive sessions and if , before
the expiry of the session in which it is so laid or the successive sessions as
aforesaid, the Legislative Assembly agrees in making any modification in the
rule or Legislative Assembly agrees that the rule should not be made, the rule
shall thereafter have effect only in such modified form or be of no effect, as
the case may be, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done or omitted to be
done under that rule.
10. Protection of action taken in good faith.- No suit, prosecution or
other legal proceedings shall lie against the State Government or any of its
officers for anything which is in good fa ith done or intended to be done under
this Act or the rules made thereunder.
11. Application of other laws not barred. - The provisions of this
Act shall be in addition to, and not in derogation of, the provisions of any
other 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
order published in the Official Gazette, make such provisions, not inconsistent
with the provisions of this Act, as may appear to be necessary for removing
the difficulty.
(2) Every order made under sub-section (1) shall be laid, as soon as
may be after it is made, before the Legislative Assembly.
____________