The Maharashtra Fiscal Responsibility and Budgetary Management Act, 2005.

2005 : Mah. XVI]   1 
THE MAHARSHTRA FISCAL RESPONSIBILITY AND  
BUDGETARY MANAGEMENT ACT, 2005 
[Text as on 25th April 2024] 
—————— 
CONTENTS 
PREAMBLE.  
SECTIONS.  
CHAPTER I 
PRELIMINARY 
 1. Short title and commencement.  
 2. Definitions. 
CHAPTER II 
BUDGET TRANSPARENCY 
 3. Fiscal Policy Statement to be laid before State Legislature.  
 4. Disclosures. 
CHAPTER III 
FISCAL MANAGEMENT PRINCIPLES 
 5. Fiscal management principles. 
CHAPTER IV 
MEASURES TO ENFORCE COMPLIANCE 
 6. Measures to enforce compliance. 
CHAPTER V 
MISCELLANEOUS 
 7. Power to make rules.  
 8. Rules to be laid before each House of State Legislature. 
 9. Protection of action taken in good faith. 
 10. Jurisdiction of Civil Courts barred. 
 11. Application of other laws not barred. 
 12. Power to remove difficulties. 
 
 
 
 
2 The Maharashtra Fiscal Responsibility and  [2005 : Mah. XVI 
                                                       Budgetary Management Act, 2005 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2005 : Mah. XVI] The Maharashtra Fiscal Responsibility and 3 
Budgetary Management Act, 2005 
MAHARASHTRA ACT NO. XVI OF 20051 
[THE MAHARASHTRA FISCAL RESPONSIBILITY AND BUDGETARY  
MANAGEMENT ACT, 2005.]  
[This Act received assent of the Governor on the 20th April 2005, assent was first  
published in the Maharashtra Government Gazette, on the 20th April 2005]. 
An Act to provide for responsibility of the State Government to ensure inter-generational equity 
in fiscal management, fiscal stability by achieving sufficient revenue surplus and prudential debt  
management consistent with fiscal sustainability, greater transparency in fiscal operations of the 
State Government and conducting fiscal policy in a medium-term framework and for matters 
connected therewith or incidental thereto. 
WHEREAS it is expedient to enact a special law in respect of the fiscal responsibility and 
budgetary mana gement; it is hereby enacted in the Fifty -sixth Year of t he Republic of India as 
follows:— 
CHAPTER I 
PRELIMINARY 
1.  Short title and commencement. — (1) This Act may be called the Maharashtra Fiscal 
Responsibility and Budgetary Management Act, 2005. 
(2) It shall come into force on such date2 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 before both Houses of the State 
Legislature under article 202 of the Constitution of India ;  
(b) “financial year” means the year beginning on the 1 st April and ending on the 31 st March 
of the next following year ;  
(c) “fiscal deficit ” means excess of total expenditure of State Government over the total 
non-debt receipt, and thus represents those borrowing requirements, net of repayment during the 
year which needs to be serviced by way of interest and principal repayment ;  
(d) “fiscal indicators” means the measures such as numerical ceilings, as may be prescribed, 
for evaluation of the fiscal position of the State Government ;  
(e) “Government” or “State Government” means the Government of Maharashtra ;  
(f) “prescribed” means prescribed by rules made under this Act ;  
(g) “revenue deficit ” means the difference between total revenue expenditure and total 
revenue receipts ;  
(h) “rules” means rules made under this Act ;  
(i) “State” means the State of Maharashtra ;  
(j) “ total liabilities ” means liabilities under the Consolidated Fund of the State and the 
Public Account of the State. 
 
                                                   
1  For Statement and Objects and Reasons of the L. A. Bill No. LXXXI of 2006, see Maharashtra Government Gazette , 
Extraordinary, Part V-A, dated 4th December 2006, Pages 472. 
2  This Act was brought into force by G.N., F.D., No. EFC/2002/CR-21/2022/F.C., dated 21 st April 2005, w.e.f. 21 st April 
2005. 
4 The Maharashtra Fiscal Responsibility and  [2005 : Mah. XVI 
                                                       Budgetary Management Act, 2005 
CHAPTER II 
BUDGET TRANSPARENCY 
3.  Fiscal Policy Statement to be laid before State Legislature. — (1) The State Government 
shall lay, in each financial year, before both Houses of the State Legislature the following statements of 
fiscal policy alongwith the annual financial statement and demands for grants, namely:— 
(a) the Medium-term Fiscal Policy Statement, 
(b) the Fiscal Policy Strategy Statement. 
(2) The Medium -term Fiscal Policy Statement shall set forth a three year rolling target for 
prescribed fiscal indicators with specification of underlying assumptions.  
(3) In p articular and without prejudice to the provisions contained in sub -section ( 2), the 
Medium-term Fiscal Policy Statement shall include an assessment of sustainability relating to,— 
(i) the balance between revenue receipts and revenue expenditures;  
(ii) the use of capital receipts for generating productive assets.  
(4) The Fiscal Policy Strategy Statement shall, inter-alia, contain,— 
(a) the policies of the State Government for the ensuing financial year relating to taxation, 
expenditure, borrowings and othe r liabilities, lending and investments, description of other 
activities such as underwriting and guarantees which have potential bu dgetary and fiscal 
implications; 
(b) the strategic priorities of the State Government for the ensuing financial year in the fiscal 
area;  
(c) the key fiscal policies and rationale for any major deviation in fiscal measures pertaining 
to taxation and expenditure;  
(d) an  evaluation as to be how the current policies of the State Government are in 
conformity with the fiscal management principles set out in section 5 and the objectives set out in 
the Medium-term Fiscal Policy Statement.  
(5) The Medium -term Fiscal Policy Sta tement and the Fiscal Policy Strategy Statement referred 
to in sub-section (1) shall be in such form as may be prescribed.  
4.  Disclosures. — (1) The State Government shall take suitable measures to ensure greater 
transparency in its fiscal operations in the public interest. 
(2) In particular and without prejudice to the generality of the foregoing provisions the State 
Government shall, at the time of presentation of annual financial statement and demands for grants, 
make such disclosures and in such form as may be prescribed.  
CHAPTER III 
FISCAL MANAGEMENT PRINCIPLES 
5.  Fiscal management principles.— (1) The State Government shall take appropriate measures 
to reduce the revenue deficit by the 31st March 2009 and thereafter maintain revenue surplus balance at 
the end of each year.  
(2) The State Government shall by rules specify the targets for reduction of fiscal deficit. For this 
purpose the fiscal deficit target shall be interpreted in the form of a ratio of expenditure on interest to 
revenue receipts :   
Provided that, the rev enue deficit and fiscal deficit may exceed such targets due to ground o r 
grounds of natural calamity or such other exceptional grounds as the State Government may specify : 
2005 : Mah. XVI] The Maharashtra Fiscal Responsibility and 5 
Budgetary Management Act, 2005 
Provided further that, a statement in respect of the ground or grounds specified in the first proviso 
shall be placed before both Houses of the State Legislature, as soon as may be possible, after such 
deficit amount exceeds the aforesaid targets. 
CHAPTER IV 
MEASURES TO ENFORCE COMPLIANCE 
6.  Measures to enforce compliance. — (1) The Mini ster-in-charge of the Finance Department 
shall review every quarter, the trends in receipts and expenditures in relation to the budget and place 
the outcome of such reviews before both Houses of the State Legislature.   
(2) Whenever there is either a shortfall in revenue or excess of expenditure over the pre -specified 
levels mentioned in the Fiscal Policy Strategy Statement and the rules, during any period in a financial 
year, the State Government shall take appropriate measures for increasing revenue and/o r for reducing 
the expenditure, including curtailing of the sums authorised to be paid an d applied from and out of the 
Consolidated Fund of the State under any law so as to provide for the appropriation of such sums : 
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 of India or to any 
other expenditure which is required to be incurred under any agreement or contract, or such other 
expenditure which cannot be postponed or curtailed.  
(3) (a) Except as provided under the first proviso to sub -section (2) of section 5 no deviation in 
meeting the obligations cast on the State Government under this Act, shall be permissible without 
approval of the State Legislature.  
(b) Where owing to unforeseen circumstances, any deviation is made in meeting the obligatio ns 
cast on the State Government under this Act, the Minister -in-charge of the Finance Department shall 
make a statement in both Houses of the State Legislature explaining,— 
(i) any deviation in meeting the obligations cast on the State Government under this Act;  
(ii) whether such deviation is substantial and relates to the actual or t he potential budgetary 
outcomes; and  
(iii) the remedial measures the State Government proposes to take.  
CHAPTER V 
MISCELLANEOUS 
7.  Power to make rules. — (1) The State Gover nment 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 power, such rules may 
provide for all or any of the following matters, namely:—  
(a) to prescribe the fiscal indicators for evaluation of the fiscal position of the State 
Government under clause (d) of section 2; 
(b) the forms of the Medium -term Fiscal Po licy Statement an Fiscal Policy Strategy 
Statement referred to in sub-section (5) of section 3; 
(c) the disclosures and form in which such disclosures shall be made under sub -section (2) 
of section 4;  
(d) the targets to be specified under sub-section (2) of section 5;  
(e) any other matter which is required to be or may be prescribed.  
8.  Rules to be laid before each House of State Legislature. — Every rule made under this Act 
shall be laid, as soon as may be, after it is made before each House of the State legislature, while it is in 
session for a total period of thirty  days, which may be comprised in one session or in two or more 
successive sessions, and if , before the expire of the session in which it is so laid or the session 
6 The Maharashtra Fiscal Responsibility and  [2005 : Mah. XVI 
                                                       Budgetary Management Act, 2005 
immediately following, both Houses agree in making any modification in the rule or both Houses agree 
that the rule should not be made, and notify such decision in the Official Gazette, the rule shall, from 
the date of such notification, have effect only in such modified form or be of no effect, as the case may 
be ; so, however, that any such modification or annulment shall be without prejudice to the validity of 
anything previously done under that rule.  
9.  Protection of action take in good faith. — No suit, prosecution or other legal proceedings 
shall lie against the State Government or any o fficer of the State Government for anything which is in 
good faith done or intended to be one under this Act or the rules.  
10.  Jurisdiction of Civil Courts barred.— No civil court shall have jurisdiction to question the 
legality of any action taken by, or any decision of, the State Government, under this Act.  
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, as occasion requires, by order published in the Official Gazette, 
do anything, not inconsistent with the provisions of this Act, wh ich appears to it to be necessary or 
expedient for the purpose of removing the difficulty : 
Provided that, no order shall be made under this sub-section after the expiry of two years from the 
commencement of this Act.  
(2) Every order made under sub -section ( 1) shall be laid, as soon as may be, after it is made 
before each House of the State Legislature.  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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