The ODISHA FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005
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GOVERNMENT OF ODISHA
ODISHA FISCAL RESPONSIBILITY AND
BUDGET MANAGEMENT ACT, 2005
AND
ODISHA FISCAL RESPONSIBILITY AND
BUDGET MANAGEMENT RULES, 2005
(Revised upto 14th September, 2017)
FINANCE DEPARTMENT
TABLE OF CONTENTS
Sl. No. Contents Page No.
I. OFRBM Act, 2005 - 1 - 10
1. Short title, extent and commencement - 1
2. Definitions - 1
3. Medium Term Fiscal Plan to be laid before the Legislature - 2
4. Fiscal Management Principles - 3
5. Fiscal Management Targets - 4
6. Measures for fiscal transparency - 6
7. Acknowledgement of liabilities in Annual Budget - 7
8. Measures to enforce compliance - 8
9. Power to make rules - 9
10. Rules to be laid - 9
11. Protection of action taken in good faith - 10
12. Application of other laws not barred - 10
13. Power to remove difficulties - 10
II. OFRBM Rules, 2005 - 11-19
1. Short title and commencement - 11
2. Definitions - 11
3. Fiscal Indicator - 12
4. Medium Term Fiscal Plan and Fiscal Policy Strategy - 12
5. Statement showing steps taken for restructuring of State Finances as
recommended by the latest Finance Commission
- 12
6. Disclosure in a statement - 12
7. Special Statements relating to employees - 12
8. Statement showing deferred liabilities - 12
9. Action Plan for Contingent liabilities - 12
III. Appendix - 21-47
1. FRBM Act, 2005 (Appendix-I) - 21
2. FRBM (Amendment) Act, 2006 (Appendix-II) - 33
3. FRBM (Amendment) Act, 2011 (Appendix-III) - 35
4.
5.
6.
Notification on limit of Debt-GSDP ratio for the
period 2010-2015 (Appendix-IV)
FRBM (Amendment) Act, 2016 (Appendix-V)
Notification on limit of Debt-GSDP ratio for the
period 2015-2020 (Appendix- VI)
-
-
-
41
43
47
* THE ORISSA FISCAL RESPONSIBILITY AND BUDGET
MANAGEMENT ACT, 2005
AN ACT TO PROVIDE FOR THE RESPONSIBILITY OF THE STATE
GOVERNMENT TO ENSURE PRUDENCE IN FISCAL MANAGEMENT AND
FISCAL STABILITY BY PROGRESSIVE ELIMINATION OF REVENUE DEFICIT
AND SUSTAINABLE DEBT MANAGEMENT CONSISTENT WITH
FISCAL STABILITY, GREATER TRANSPARENCY IN FISCAL
OPERATIONS OF THE GOVERNMENT AND CONDUCT OF
FISCAL POLICY IN A MEDIUM TERM FISCAL FRAMEWORK
AND FOR MATTERS CONNECTED THEREWITH OR
INCIDENTAL THERETO.
Be it enacted by the Legislature of the State of Orissa 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 Orissa Fiscal
Responsibility and Budget Management Act, 2005.
(2) It extends to the whole of the State of Orissa.
(3) It shall come into force on such date as the State Government may, by
notification, in the official Gazette, appoint in this behalf.
2. Definitions – In this Act, unless th e context otherwise requires,-
(a) “Budget” means the annual financial stat ement laid before the State Legislature
under article 202 of the Constitution;
(b) “Current year” means the financial year for which Budget and Medium Term
Fiscal Plan (MTFP) is being presented;
1[(b-1) “Finance Commission” means th e Commission constitut ed under Article
280 of the Constitution of India;]
(c) “financial year” means the year beginning from 1 st day of April and ending on
31st day of March following;
(d) “fiscal deficit” means the excess of ---
(i) total disbursements from the Consolidated Fund of the State(excluding
repayment of debt) over total receipts into the Fund excluding the debt receipts
during a financial year; or
(ii) total expenditure from Consolidated Fund of the State (including loans but
excluding repayment of debt) over ow n tax and non-tax revenue receipts,
devolution and other grants from Govern ment of India to the State, and non-
debt capital receipts during a financial year which represents the borrowing
*Published vide Orissa Gazette Extraordinary No.802/16.05.2005 – Orissa Act 6 of 2005
1 Inserted vide Section.2 of the Odisha Fiscal Responsibility and Budget Management (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
1
requirements, net of repayment of debt , of the State Government during the
financial year;
(e) “fiscal indicators” means the meas ures such as numerical ceilings and
proportions to gross state domestic pr oduct, as may be prescribed, for
evaluation of the fiscal position of the State Government;
(f) “non-interest Committed Revenue Expe nditure” means the sum total of salary
expenditure and pension expenditure of th e State in the revenue account of the
Consolidated Fund of the State;
(g) “off Budget Borrowings” means borrowings by the State Government or its
Agencies which are not reflected in the Budget;
(h)“prescribed” means prescribed by rules made under this Act;
(i) “previous year” means the year preceding the current year;
(j) “primary deficit/surplus” means the non-interest Fiscal Deficit/Surplus;
(k) “Reserve Bank” means the Reserve Ba nk of India constituted under the Reserve
Bank of India Act, 1934;
(l) “revenue deficit” means the difference between revenue expenditure and revenue
receipts which indicates increase in liabilities of the State Government without
corresponding increase in assets of the State Government; and
(m) “total liabilities” means the liabilit ies under the Consolidated Fund and the
Public Accounts of the State of Orissa.
3. Medium Term Fiscal Plan to be laid before the Legislature - (1) The State
Government shall lay in each financial year before Legislative Assembly a
Medium Term Fiscal Plan along with the Annual Budget.
(2) The Medium Term Fiscal Plan shall set forth a three-year rolling target for
prescribed fiscal indicators with specification of underlying assumptions.
(3) In particular and without prejudice to the provisions contained in sub-section
(2), the Medium Term Fiscal Plan shall include an assessment of sustainability
relating to-
(i) the balance between revenue receipts and revenue expenditures;
(ii) the use of capital receipts incl uding market borrowings for generating
productive assets;
(iii) the medium term fiscal objectives of the State Government;
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(iv) the evaluation of performance of th e prescribed fiscal indicators in the
previous year vis-a-vis the targets set out earlier and the likely
performance in the current financial year as per the revised estimates;
(v) the strategic priorities of the State Government in the fiscal area for the
current financial year in form of a Fiscal Policy Strategy; and
(vi) the policies of the State Government for the current financial year relating
to expenditure, borrowings and other liabilities, lending and investments
and description of other activities, such as guar antees and activities of
Public Sector Undertakings which have potential budgetary implications.
(4) The Medium Term Fiscal Plan shall be in such Form as may be prescribed.
4. Fiscal Management Principles - The State Government shall take appropriate
measures to eliminate the revenue defic it and to contain the fiscal deficit at
sustainable level and build up adequate revenue surplus through appropriate
measures such as,-
(a) maintaining Government debt at prudent levels;
(b) managing guarantees and other contingent liabilities prudently, with particular
reference to level of risk of such liabilities;
(c) taking policy decisions of the Governme nt with due regard to their financial
implications on future generations;
(d) borrowings for productive purposes and creation of capital assets, and are not
applied to finance current expenditure;
(e) maintaining a reasonable degree of stability and predictability in the level of
the tax burden;
(f) maintaining the integrity and stability of the tax system by avoiding special
incentives, concessions and exemptions;
(g) pursuing tax policies with due regard to economic efficiency and compliance
costs;
(h) pursuing non-tax revenue policies with due regard to cost recovery and equity;
(i) pursuing expenditure policies that would provide impetus for economic growth
and poverty reduction;
(j) building up a revenue surplus for us e in capital formation and productive
expenditure;
(k) maintaining physical assets of the Government properly;
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(l) disclosing sufficient information to allow the public to scrutinize the conduct
of fiscal policy and the state of public finances;
(m) using Government resources in ways th at give best value for money; and also
public assets are put to best possible use;
(n) minimizing fiscal risks associated w ith running of public sector undertakings
and utilities providing public goods and services;
(o) managing expenditure consistent with the level of revenue generated;
(p) formulating budget in a realistic and objective manner with due regard to the
general economic outlook a nd realistic revenue pr ospects and minimize
deviations during the course of the year; and
(q) taking appropriate measures in its cash management practices so as to avoid
frequent recourse to overdraft from Reserve Bank and to gradually reduce the
closing cash balance with Reserve Bank of India on a year to year basis so as
to keep the closing balance within the Ways and Means limit.
5. Fiscal Management Targets –In particular and without prej udice to the generality of
the foregoing provisions, the State Government shall –
(a) reduce revenue deficit to nil within a period of five fina ncial years beginning
from the initial financial year on the 1
st day of April, 2004 and ending on the
31st day of March,2009; 1[the annual reduction of revenue deficit on the
average being rupees two hundred and eighty-five crores] and 2[after
commencement of Odisha Fiscal Responsibility and Budget Management
(Amendment) Act,2011, the revenue deficit shall be maintained at zero for the
financial year, 2011-12 and for subsequent financial years].
(b) reduce fiscal deficit to not more th an three percent of the estimated gross
domestic product within a period of five financial years beginning from the
initial financial year on the 1
st day of April, 2004 and ending of the 31 st day of
March, 2009 3[and from financial year, 2011- 12 and onwards shall contain
fiscal deficit within three percent of the estimated Gross State Domestic
Product (GSDP)].
(c) omitted.
(d) omitted.
1 Inserted vide Section.2 of the Orissa Fiscal Responsibility and Budget Management (Amendment) Act, 2006 published
vide Orissa Gezette Extraordinary No.669/20.05.2006 Orissa Act 6 of 2006.
2 Inserted vide Section.3(i) of the Odisha Fiscal Re sponsibility and Budget Manageme nt (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
3 Inserted vide Section.3(ii) of the Odisha Fiscal Re sponsibility and Budget Manageme nt (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012
4
(e) Other important monitorable fiscal targets would be-
(i) the ratio of salary to State’s own reve nue is to be reduce d to eighty percent by
the year ending 31
st day of March, 2008;
(ii) the ratio of non- interest committed revenue expenditure to State’s own and
Mandated Revenue is to be reduced to fifty-five percent by the year ending
31
st day of March,2008: and
(iii) omitted.
(f) In order to bring the de bt stock to a sustainable level, interest payment as a
percentage of revenue receipt is to be limited to
1[fifteen percent.]
(g) the total debt stock shall be limite d to three hundred per cent of the total
revenue receipt of the State by the year ending 2007-08.
2[(h) notify the debt GSDP ratio limit fixed by the Finance Commission and
guidelines, if any, issued by the Govern ment of India from time to time, and
ensure that the debt GSDP ratio are maintained in accordance with the said
limit]; and
3[Provided that the revenue deficit a nd the fiscal deficit may exceed the
limits specified under this section on ground of shortfall in the central tax
devolutations in relation to the budgeta ry estimates of the Union of India or
unforeseen demands on the finances of the State Government arising out of
natural calamity or such other exceptiona l ground as the State Government may,
by order, specify:
Provided further that a statement in respect of the ground on which the
deviation has been made under the first pr oviso shall be placed before the State
Legislature].
4[Provided also that for any give n financial year for which the
borrowing limits are to be fi xed if the debt-GSDP ratio is less than or equal to 25
per cent in the preceding financial year, the fiscal deficit may go up further by
1 Inserted vide Section.3(vi) of the Odisha Fiscal Responsibility and Budget Management (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
2 Inserted vide Section.3(vii) of the Odisha Fiscal Responsibility and Budget Management (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
3 Inserted vide Section.3(viii) of the Odisha Fiscal Responsibility and Budget Management (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
4 Inserted vide Section.2 of the Odisha Fiscal Responsibility and Budget Management (Amendment) Act, 2016
published vide Odisha Gezette Extraordinary No.1994/07.11.2016 Odisha Act 12 of 2016.
5
0.25 per cent on the GSDP, when there is no revenue deficit in the said year and
the immediate preceding financial year
Provided also that for a given fina ncial year for which the borrowing
limits are to be fixed if the interest payments are less than or equal to 10 per cent
of the revenue receipts in the preceding financial year, the fiscal deficit may go up
further by 0.25 per cent on the GSDP, when th ere is no revenue deficit in the said
year and the immediate preceding financial year:
Provided also that if the Centra l Government requires the State
Government to take over the debt of any State Publ ic Sector Undertaking or
Utility in a particular financial year, the fiscal deficit limit as fixed in this section
may go up by the amount of debt taken ove r by the State Government in that
financial year].
6. Measures for fiscal Transparency – (1) The State Government shall take suitable
measure to ensure greater transparency in its fiscal operations in public interest
and minimize secrecy as far as practicab le in the preparation of the Annual
Budget :
Provided that the State Government shall have the power to reserve any
such information which would adversel y affect the intere st of the State
Exchequer.
(2) The State Government shall at the ti me of presentation of the Annual Budget
disclose in a statement the significant changes in the accounting standards,
policies and practices affecting or lik ely to affect the computation of
prescribed fiscal indicators.
(3)The consolidated position in respect of all Demands shall be brought out in the
Budget at a glance.
(4) The estimated yearly pension liability shall be worked out on realistic basis for
the next ten years.
(5) New policies being introduced in the Annual Budget shall be clearly
described.
(6) Budget information shall be presented in a way that facilitates policy analysis
and promotes accountability.
(7) Details regarding arrear of Revenues (both tax and non-tax revenues) shall be
given in a separate statement to be appended with the Receipt Budget.
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(8) Prioritising the allocati on of the funds shall be done in a manner that would
endure completion of on- going project s as per the time schedule.The State
Government shall furnish a list of such projects based on zero base investment
review and targeted date of completion and reason of deviation, if any, in the
previous years.
(9) The statement indicating the instituti on wise State Government guarantees
given, default by these organizations in discharging debt servicing liabilities
and contingent liability created in the State Government account, on account
of default of these organisations shall be placed before the State Legislature.
The statement will also i ndicate the working of th e Escrow Account opened
by the Public Undertakings, Co-operatives and Urban Local Bodies.
(10) Special Statements along with the budget giving in detail the number of
employees in government, public sector and aided institutions and related
salaries shall be brought out.
(11) The Budget document sh all contain a statement s howing tax concession and
exemptions given in financial year.
(12) The State Government shall publish fu ll information on the level of its debt
and financial assets. The information on debt shall disclose maturity profile
and interest rate.
(13) A report on execution of the budget and achievement against fiscal
targets/indicator shall be presented before the State Legislature.
1[(14) Annual statement along with the Budget shall be brought out giving
prospects of the State’s economy and related fiscal strategy].
7. Acknowledgement of liabi lities in Annual Budget –While presenting the Annual
Budget for the current year , the State Government sh all furnish a statement
showing the deferred liabilities on the following accounts,-
(i) States matching share under central sponsored plan schemes not provided for
in the previous years and the deficit of such State share in the current financial
year;
(ii) bills presented in the treasury but not encashed at the close of the previous
financial year;
(iii)Central assistance received but not utili zed at the end of a particular financial
year; and
1 Inserted vide Section.3 of the Orissa Fiscal Responsibility and Budget Management (Amendment) Act, 2006 published
vide Orissa Gezette Extraordinary No.669/20.05.2006 Orissa Act 6 of 2006.
7
(iv) undisbursed amount lying in the civil deposits.
8. Measures to enforce Compliance – (1) The Annual Budget and policies announced at
the time of the Budget shall be consistent with objectives a nd targets specified
the Medium Term Fiscal Plan for coming years.
1[(1-a) The State Government shall issue appropriate guidelines from time to time,
for timely spending of budgetary grants];
(2) the Minister –in-charge of Finance Department shall review the trends in
receipts and expenditure in relation to the budget and remedial measures to be
taken to achieve the budget targets.
2[(2-a) For the purpose of ensuing complian ce of the provisions of this Act, the
State Government shall entrust an agency independent of the State
Government interference, who shall periodically make review of such
compliance and submit a report to that e ffect to that Government who shall
cause every such report to be laid, as soon as may be af ter it is received,
before the State Legislature]; and
(3) Whenever there is either short fall in revenue or excess of expenditure over
pre-specified levels during any period in a financial year , on account of any
new policy decision of the State Government that affects the State
Government, the State Government prior to taking such policy decision, shall
take measures to fully offset the fiscal impact for the current and future years
by curtailing the sums authorised to be paid and applied from and out of the
Consolidated Fund of the State under any Act 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 expenditure
charged on the Consolidated Fund of the State under clause (3) of article 202
of the Constitution.
(4) In case the revenue deficit and fiscal deficit exceed in th e case of unforeseen
demands on the finances of the Stat e Government, the Government shall
identify the net fiscal cost of the cala mity and such cost would provide ceiling
for extent of non-compliance to the specified limits.
1 Inserted vide Section.4(i) of the Odisha Fiscal Re sponsibility and Budget Management (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
2 Inserted vide Section.4(ii) of the Odisha Fiscal Responsibility and Budget Manage ment (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
8
(5) Not more than one Supplementary Statement of expenditure shall be presented
in a financial year. Whenever such Supplementary estimates are presented
before the State Legislature, the Stat e Government shall also present an
accompanying statement indicating th e corresponding curtailment of
expenditure to fully offset the fiscal im pact of the Supplementary estimates in
relation to the budget targets of the current year and the Medium Term Fiscal
Plan objectives.
1[Provided that where expenditu re has been made by taking
advance from the Orissa Contingency Fund, special supplementary statements
of expenditure shall be presented in c ourse of the year exclusively for the
purpose of recoupment of such advance].
(6) No liability shall be created outside the budget provision in a financial year
without the approval of Government in Finance Department. Creation of any
such unauthorized liability shall be treated as gross negligence and the
officer(s) responsible for creation of such liability shall be personally liable
for such additional liability created.
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 general ity of the foregoing power,
such rules may provide for all or any of the following matters, namely:-
(a) the fiscal indicators to be prescrib ed for the purpose of sub-section(2) of
section 3;
(b) the Forms of the Medium Term Fiscal Policy Plan under sub-section(1) of
section 3 and Fiscal Policy Stra tegy statement under clause(v) of sub-
section(3) of section 3;
(c) the Form of statement under sub-section(2) of section 6; and
(d) any other matter which is required to be and not inconsistent with the
provisions of the Act .
10. Rules to be laid – Every rule made under this act shal l, as soon as may be after it is
made, be laid before the State Legislat ure for a total period of fourteen days
which may be comprised in one or more sessions and it during the said period the
State Legislature makes modifications, if any, therein, the rule shall thereafter,
have effect only in such modified form so, however, that su ch modification shall
be without prejudice to the validity of anything previously done under that rule.
1 Inserted vide Section. 4(iii) of the Odisha Fiscal Re sponsibility and Budget Management (Amendment) Act, 2011
published vide Odisha Gezette Extraordinary No.170/01.02.2012 Odisha Act 1 of 2012.
9
11. Protection of action taken in good faith –No suit, prosecution or other legal
proceedings shall lie against the State G overnment or any officer of the State
Government for anything which is in good faith done or intended to be done
under this Act or the rules made there under.
12. 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.
13. Power to remove difficulties (1) If any difficulty arises in giving effect to the
provisions of this Act, the State Gove rnment may, by order, published in the
official Gazette, make such provisions not inconsistent with the provisions of this
Act as may appear be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of two
years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is
made, before the Legislative Assembly.
By order of the Governor
Sd/
A.P.SAHOO
Additional Secretary to Government.
10
EXTRAORDINARY
PUBLISHED BY AUTHORITY
No. 1265, CUTTACK, THURSDAY, AUGUST 11, 2005/ SRAVANA 20, 1927
FINANCE DEPARTMENT
NOTIFICATION
The 11
th August, 2005
S.R.O. No. 360/2005- In exercise of the powers conferred by section 9 of the Orissa
Fiscal Responsibility and Budget Management Act, 2005 (Orissa Act 6 of 2005), the State
Government do hereby make the following rules, namely:-
1. Short Title and Commencement. – (1) These rules may be called the Orissa
Fiscal Responsibility and Budget Management Rules, 2005.
(2) They shall come into force on the date of their publication in the Orissa
Gazette.
2. Definitions. --- (1) In these rules, unless the context otherwise requires, -
(a) “Act” means the Orissa Fiscal Responsibility and Budget Management
Act, 2005;
(b) “Budget at a glance” means the Budget at a glance containing consolidated
information on state’s rec eipt and expenditure and other related
information as placed before the Legislature along with the Budget;
(c) “Form” means a Form appended to these rules;
(d) “GSDP” means the Gross State Domestic Product at Current Prices;
(e) “Mandated Revenue” means the sum total of state’s share in central taxes
and the non plan revenue deficit grant received from Government of
India; and
(f) “Section” means a section of the Act.
(2) The words and expressions used but not defined in these rules and defined in the
Act shall have the same meanings as respectively assigned to them in the Act.
The Orissa G a z e t t e
11
3. Fiscal Indicator. – The fiscal indicators required to be prescribed for the purpose s
of the Act shall be as follows :-
(a) revenue deficit as a percentage of Gross State Domestic Product;
(b) fiscal deficit as a percentage of Gross State Domestic Product;
(c) Primary deficit/ surplus as a percentage of Gross State Domestic Product; and
(d) total debt stock as a percentage of Gross State Domestic Product.
4. Medium Term Fiscal Plan and Fiscal Policy Strategy.– (1) The strategic
priorities of the state government in the fiscal area shall be prescribed in Form I.
(2) The Medium Term Fiscal Plan shall be prepared by the State Government in
Form II.
5. Statement showing steps taken for restructuring of State Finances as
recommended by the latest Finance Commission . – The State Government shall, while
presenting the Fiscal Policy Strategy, include therein details of the steps taken for
restructuring the State Finances as recommended by the latest Finance Commission.
6. Disclosure in a statement . - The State Government shall, at the time of
presentation of the Annual Budget, make disclosure in a statement in Form III indicating any
significant changes in the accounting standards, policies and practices af fecting or likely to
affect the computation of prescribed fiscal indicators.
7. Special Statements relating to employees . - The State Government shall, at the
time of presentation of Annual Budget, furnish a statement in Form IV giving in detail the
number of employees and related salaries as specified in sub-section (10) of section 6.
8. Statement showing deferred liabilities . – The State Government shall, while
presenting the Annual Budget for the current year, furnish a statement in Form V showing the
deferred liabilities as specified in section 7.
9. Action Plan for Contingent liabilities .- The state government shall transfer a
certain amount from revenue account to a “Sinking Fund”, and the Insurance and Pension
Fund to meet huge future repayment of borrowings and rising expenditure liabilities on
account of pension etc. The fund so transferred shall be maintained outside the Consolidated
Fund of the State and Public Account so that the corpus of the Sinking Fund and the
Insurance and Pension Fund can be utilized to meet the future contingent liabilities on
account of huge repayment of loans, rising expenditure on pension.
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FORM –I
(See rule 4(1))
FISCAL POLICY STRATEGY STATEMENT
A. Fiscal Policy overview: [this paragraph will present an overview of the present fiscal
policy of the Government].
B. Fiscal Policy for the Current Year : [This paragraph shall have the following sub-
paragraphs dealing with –
(1) TAX Policy – In this sub- paragraph on tax policy, major changes proposed to be
introduced in taxes in the current financial year will be presented. It shall contain
details of tax exemptions, concessions and introduction of new taxes and user charges
etc. It shall also contain details of tax reforms aimed at building up non -discretionary
and revenue elastic system of taxation with tax rates that are low, limited in number of
rate categories and stable. It shall also describe various non tax revenues reforms
where user charges, as a short term objective, ensure recoveries of current costs, and
aim at full recovery of costs measured at acceptable efficiency levels in the longer
run, in case of services where there is no clear cut case for subsidisation and ensure
rates of return on investment.
(2) Expenditure Policy – Under this sub- paragraph, major priorities in the allocation of
expenditure shall be elaborated. It may also contain an assessment of principles
regarding the benefits and target group of beneficiaries. It should describe the steps
taken towards expenditure restructuring relating to both in size and sectoral
allocations aimed at removing inefficiencies arising from misallocations, design and
implementation of schemes, delivery of services.
(3)
Government Borrowings, Lendings and Investments - In this sub- paragraph, the
policy relating to Government internal borrowings, lendings and recovery of loans
and advances etc. shall be indicated.
(4)
Other liabilities – This sub-paragraph shall include information relating to guarantees
and off-budget borrowings of Government having potential budgetary implications. It
would also include details relating to one -time settlement of such liabilities, measures
of limit the guarantees etc.]
C. Strategic Priorities for the Current Year –
[(1) Resource mobilisation for the current financial year through tax, non- tax and other
receipts shall be spell out.
(2) The board principles underlying the expenditure management through prioritisation of
different schemes shall be spelt out.
(3) Priorities relating to incomplete projects and new projects shall be detailed including
and assessment of the on-going projects in the State.]
D. Policy Evaluation –[ This paragraph shall contain an evaluation of the changes
proposed in the fiscal policy for the ensuing year with reference to fiscal deficit
reduction and objectives set out in the Medium Term Fiscal Plan.]
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E. Restructuring the State Finances as recommended by latest Finance Commission
– [ This paragraph shall contain, in details, the various steps taken by the State
Government towards restructuring state finances in order to achieve the follow ing
objectives :
(a) Bringing down the ratio of interest payments to total revenue receipt
(b) Bringing down the ratio of total salary bill relative to revenue expenditure net of
interest and pension
(c) Containing the ever increasing pension liability by following the initiative taken
by the Central Government for pension reforms
(d) Rationalising subsidies by reducing their overall volume, increasing their
transparency by making them explicit and improving their targeting. This should
include collection of user charges and recoveries of cost of maintenance of
irrigation work, urban water supply etc.
(e) Bringing down the debt – GSDP ratio.]
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FORM – II
[See rule 4 (2)]
MEDIUM TERM FISCAL PLAN
A. Fiscal Indicators – Rolling Targets
Description Last
available
Actuals
Last
Year
Revised
Estimates
Current
Year Target
Budget
Estimates
Targets for
next two years
Y Y + 1 Y + 2
Revenue Deficit as
percentage of GSDP
Fiscal Deficit as
percentage of GSDP
Primary Deficit as
percentage of GSDP
Total Debt Stock as
percentage of GSDP
B. Assumptions underlying the Fiscal Indicators -
1. Revenue receipts
(a) Tax Revenue – Tax wise growth rates
(b) Non Tax Revenue – policies and approaches
(c) Devolution to States – Plan Receipts from Government of India
2. Capital receipts –
(a) Recovery of Loans & Advances – Principles and measures adopted by State
Government to enhance recovery of loans and advances
(b) Other Receipts – New dis-investment/ sale decisions taken by State Government
(c) Borrowings – Plan Borrowings and other internal borrowings including proposals
for debt swap
3. Total Expenditure – Policy Stance
(a) Revenue Account -
(i) Salary & pension – measures to control
(ii) Subsidies – Policies and new proposals
(iii) Maintenance Expenditure – Norms and Finance Commission
recommendations
(iv) Calamity Relief –
(v) Others
15
(b) Capital Account -
(i) Loans & Advances –
(ii) Capital Outlay – measures taken by the State Government to enhance
provision for developmental expenditure
(c) Assessment of sustainability relating to -
(i) The balance between revenue receipts and revenue expenditures. The
MTFP may specify the tax -GSDP ratio for the current years and the
subsequent two years. It may discuss the non tax revenue and the
policies concerning the same. Expenditure on revenue account, both
plan and non plan may also be made with particular emphasis on the
measures proposed to meet the medium term fiscal objectives.
(ii) The use of capital receipts including market borrowings for generating
productive assets. The Fiscal Policy Strategy statement may specify the
proposed use of capital receipts for generating productive assets in
different categories. It may spell out proposed changes among these
categories and discuss it in terms of overall policy of the Government.
16
FORM – III
[See rule 6]
DISCLOSURE STATEMENT
17
FORM – IV
[See rule 7]
SPECIAL STATEMENT ON NUMBER OF EMPLOYEES AND RELATED SALARIES
PROFORMA –I/ II/ III
(FOR GOVERNMENT EMPLOYEES/ AIDED EDUCATIONAL INSTITUTIONS/PSUS)
NON PLAN/ PLAN
AS ON 31ST MARCH 2003/ 2004/ 2005
DEMAND NO. –
EMPLOYEES (IN
NUMBER)
EXPENDITURE (RUPEES IN LAKH)
Major Head/ Scales of
Pay
Sanctioned
Strength
Men in
position
Pay
including
special pay
D.A Allowances
(HRA,
RCM, OA)
Total
MAJOR HEAD NO.-
SCALES OF PAY
Note: Information relating to employees on Consolidated Pay shall be shown separately
indicating the amount of consolidated pay against each employee.
18
FORM – V
[See rule 8]
STATEMENT OF DEFERRED LIABILITIES
[ No. 39247-Bt.I-16/2005-F.]
By order of the Governor
S. KANUNGO
Under Secretary to Government
Printed and published by the Director, Printing, Stationery and Publication, Orissa, Cuttack-10
Ex. Gaz. 725-193+800
19
20
APPENDIX-I
EXTRAORDINARY
PUBLISHED BY AUTHORITY
No. 802, CUTTACK, MONDAY, MAY 16, 2005/ BAISAKHA 26, 1927
LAW DEPARTMENT
NOTIFICATION
The 16th May 2005
No. 7033/Legis.- The following Act of the Orissa legislative Assembly
having been assented to by the Governor on the 11th May 2005 is hereby published
for general information.
ORISSA ACT 6 OF 2005
THE ORISSA FISCAL RESPONSIBILITY AND BUDGET
MANAGEMENT ACT, 2005
AN ACT TO PROVIDE FOR THE RESPONSIBILIT Y OF THE STATE
GOVERNMENT TO ENSURE PRUDENCE IN FISCAL MANAGEMENT
AND FISCAL STABILITY BY PROGRESSIVE ELIMINATION OF REVENUE
DEFICIT AND SUSTAINABLE DEBT MANAGEMENT CONSISTENT WITH
FISCAL STABILITY, GREATER TRANSPARENCY IN FISCAL
OPERATIONS OF THE GOVERNMENT AND CONDUCT OF FISCAL
POLICY IN A MEDIUM TERM FISCAL FRAMEWORK AND FOR MATTERS
CONNECTED THEREWITH OR INCIDENTAL THERETO.
BE it enacted by the Legislature of the State of Orissa in the Fifty -
sixth year of the Republic of India as follows: –
1. (1) This Act may be called the Orissa Fiscal Responsibility and
Budget Management Act, 2005.
(2) It extends to the whole of the State of Orissa.
(3) It shall come into force on such date as the State Government
may, by notification, in the official Gazette, appoint in this behalf.
2. In this Act, unless the context otherwise requires, –
(a) “Budget” means the annual financial statement laid before
the State legislature under article 202 of the Constitution;
The Orissa G a z e t t e
Short title,
extent and
commence-
ment.
Definitions.
21
(b)“current year” means the financial year for which Budg et
and Medium Term Fiscal Plan (MTFP) is being presented;
(c) “financial year” means the year beginning from 1 st day of
April and ending on the 31st day of March following;
(d) “fiscal deficit” means the excess of –
(i) total disbursements from the Consolidated Fund of the
State (excluding repayment of debt) over total receipts
into the Fund excluding the debt receipts during a
financial year; or
(ii) total expenditure from Consolidated Fund of the State
(including loans but excluding repayment of debt) over
own tax and non- tax revenue receipts, devolution and
other grants from Government of India to the State,
and non- debt capital receipts during a financial year
which represents the borrowing requirements, net of
repayment of debt, of the State Government during
the financial year;
(e) “fiscal indicators” means the measures such as numerical
ceilings and proportions to gross state domestic product ,
as may be prescribed, for evaluation of the fiscal position
of the State Government;
(f) “non-interest Committed Revenue Expenditure” means the
sum total of salary expenditure and pension ex penditure
of the State in the revenue account of the Consolidated
Fund of the State;
(g) “off Budget Borrowings” means borrowings by the State
Government or its Agencies which are not reflected in the
Budget;
(h) “prescribed” means prescribed by rules made under this
Act;
(i) “previous year” means the year preceding the current year;
(j) “primary deficit/surplus” means the non- interest Fiscal
Deficit/ Surplus;
(k) “Reserve Bank” means the Reserve Bank of India
constituted under the Reserve Bank of India Act, 1934;
(l) “revenue deficit” means the difference between revenue
expenditure and re venue receipts which indicates increase
in liabilities of the State Government without corresponding
increase in assets of the State Government; and
(m) “total liabilities” means the liabilities under the consolida ted
Fund and the Public Accounts of the State of Orissa.
2 of 1934.
22
3. (1) The State Government shall lay in each financial year before
Legislative Assembly a Medium Term Fiscal Plan alongwith the Annual
Budget.
(2) The Medium Term Fiscal Plan shall set forth a three- year rolling
target for prescribed fiscal indicators with specification of underlying
assumptions.
(3) In particular and without prejudice to the provisions contained
in sub- section (2) , the Medium Term fiscal Plan shall include an
assessment of sustainability relating to –
(i) The balance between revenue receipts and revenue
expenditure;
(ii) the use of capital receipts including market borrowings
for generating productive assets;
(iii)the medium term fiscal objectives of the State Government;
(iv) the evaluation of performance of the prescribed fiscal
indicators in the previous year vis -à-vis the targets set
out earlier and the likely performance in the current financial
year as per the revised estimates;
(v) the strategic priorities of the State Government in the fiscal
area for the current financial year in form of a Fiscal Policy
Strategy; and
(vi) the policies of the State Government for the current
financial year relating to expenditure, borrowings and other
liabilities, lending and investments and description of other
activities, such as guarantees and activities of Public
Sector Undertakings which have potential budgetary
implications.`
(4) The Medium Term fiscal Plan shall be in such Form as may
be prescribed.
4. The State Government shall take appropriate measures to
eliminate the revenue deficit and to contai n the fiscal deficit at sustainable
level and build up adequate revenue surplus through appropriate measures
such as, –
(a) maintaining government debt at prudent levels;
(b) managing guarantees and oth er contingent liabilities prudently,
with particular reference to level of risk of such liabilities;
(c) taking policy decisions of the Government with due regard to
their financial implications on future generations;
Fiscal
Management
Principles.
Medium Term
Fiscal Plan
to be laid
before the
legislature.
23
(d) borrowings for productive purposes and creation of capital
assets, and are not applied to finance current expenditure;
(e) maintaining a reasonable degree of stability and predictability
in the level of the tax burden;
(f) maintaining the integrity and stability of the tax system by
avoiding special incentives, concessions and exemptions;
(g) purs uing tax policies with due regard to economic efficiency
and compliance costs;
(h) pursuing non- tax revenue policies with due regard to cost
recovery and equity;
(i) pursuing expenditure policies that would provide impetus for
economic growth and poverty reduction;
(j) building up a revenue surplus for use in capital formation and
productive expenditure;
(k) maintaining physical assets of the Government properly;
(l) disclosing sufficient information to allow the public to scrutinize
the conduct of fiscal policy and the state of public finances;
(m)using government resources in ways that give best value for
money; and also public assets are put to best possible use;
(n) minimizing fiscal risks associated with running of public sector
undertakings and utilities providing public goods and services;
(o) managing expenditure consistent with the level of revenue
generated;
(p) formulating budget in a realisExcerpt shown. Open the full act in Lexace.