LexThe Uttarakhand fiscal responsibility and Budget Management Act
Uttarakhand · state statute
Open in Lexace · Ask the AI about this actTHE UTTARAKHAND FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005
[Uttarakhand Act No. 22 of 2005]
to provide for the responsibility of the State Government to ensure fiscal stab ility and
sustainability, and enhance the scope for improving social and physical infrastructure and human
development by achieving sufficient revenue surplus, reducing fiscal deficit and removing impediments to
the effective conduct of fiscal policy and prudent debt management through limits on State Government
borrowings, Government guarantees, debt and deficits, greater transparency in fiscal operations of the State
Government and use of a medium term fiscal framework and for matters connected therewith or incidental
thereto.
AN
ACT
Be it enacted in the Fifty-sixth year of the Republic of India as follow-
Short title and
commencement
1. (1) This Act may be called the Uttara khand Fiscal Responsibility and Budget
Management Act, 2005.
(2) It shall come into force on such date as the State Government may, by
notification in this behalf, appoint.
Definitions 2. In this Act, unless the context otherwise requires----
(a) “annual budget” means the annual financial statement laid before the house of
State Assembly under Article 202 of the constitution;
(b) “current year” mean s the year preceding the year for which budget is being
presented;
(c) “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 the 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 n on-debt capital receipts during a financial year which
represents the borrowing requirements, net of repayment of debt, of to
State Government during the financial year;
(d) “Fiscal Indicators” means the measures such as numerical ceilings and
proportions to gross State domestic product or any other ratios, as may be
prescribed, for evaluation of the fiscal position of the State Government;
(e) “previous year” means the year preceding the current year;
(f) “revenue deficit” means the difference between revenue expendi ture and
revenue receipts;
(g) “total liabilities” means the liabilities under the consolidated Fund of the State
and the public account of the State.
(h) { “Interest Payment’ means the amount payable other than refund of principal
amount on the internal debt of t he State Government from the Central
Government and on State provident funds and other liabilities in the public
account.}1
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1- Add. by section 2 of UK Act no 40 of 2016.
Medium Term
Fiscal pol icy
to be laid
before the
State Assembly
3. (1) The State Government shall in each financial year lay before the State
Assembly a Medium Term Fiscal policy along with the annual budget.
(2) The Medium Term Fiscal Policy shall set forth a three year rolling targets f or
the prescribed fiscal indicators with specification of under lying assumptions.
(3) In particular and without prejudice to the provisions contained in sub -section
(2), the Medium Term Fiscal Policy shall include an assessment of
sustainability relating to—
(i) the balance between revenue receipts and revenue expenditure;
(ii) the use of capital receipts including borrowings for generating productive
assets.
(4) The Medium Term Fiscal Policy shall, inter-alia contain—
(a) the medium term fiscal objectives of the State Government;
(b) an evaluation of performance on the basis of the prescribed fiscal
indicators vis -a-vis the targets set out in the budget and the likely
performance in the current year as per revised estimates;
(c) a statement on recent economic trends and future prospec ts for growth
and development affecting fiscal position of the State Government;
(d) the strategic priorities of the State Government in the fiscal areas for the
ensuing financial year;
(e) the policies of the State Government for the ensuing financial year
relating to taxation, expenditure, borrowings and other liabilities,
lending and investments, pricing of administered goods and services,
guarantees and activities of Public Sector Undertakings which have
potential budgetary implications; and the key fiscal meas ures and
targets pertaining to each of these;
(f) an evaluation as to how 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 Medium Term Fiscal Policy.
(5) The Medium Term Fiscal Policy shall be in such form as may be prescribed.
Fiscal
Management
Principles
4. (1) The State Government shall be guided by the following fiscal management
principles:-
(a) To maintain Government debt at prudent levels;
(b) To manage guar antees and other contingent liabilities prudently, with
particular reference to the quality and level of such liabilities;
(c) To ensure that policy decisions of the Government have due regard to
their financial implication on future generation;
(d) To ensure that borrowings are used on development activities, which are
evaluated to become self -sustained, and creation or augmentation of
capital assets, and are not applied to finance current expenditure.
(e) To ensure a reasonable degree of stability and predictability in the level of
tax burden;
(f) To maintain the integrity of the tax system by minimising special
incentives, concessions and exemptions;
(g) To pursue tax polices with due regard to economic efficiency and
compliance costs;
(h) To pursue non -tax revenue policies with due regard to cost recovery and
equity;
(i) To pursue expenditure policies that would provide impetus to economic
growth, poverty reduction and improvement in human welfare;
(j) To build up a revenue surplus for use in capital formation and productive
expenditure;
(k) To ensure that physical assets of the Government are property maintained;
(l) To disclose sufficient information to allow the public to scrutinize the
conduct of fiscal policy and the state of public finance;
(m) To ensure that Government uses resources in ways that give best value for
money and also ensure that public assets are put to best possible use;
(n) To minimize fiscal risks associated with running of public sector
undertakings and utilities providing public goods and services;
(o) To manage expenditure consistent with the level of revenue generated;
(p) To formulate budget in realistic and objective manner with due regard to
the general economic outlook and revenue prospects and minimize
deviations during the course of the year;
(q) To ensure discharge of current liabilities in a timely manner.
(2) The State Government shall take appropriate measures to eliminate the
revenue deficit and control the fiscal deficit at sustainable level and built up
adequate revenue surplus.
(3) In particular, and without prejudice to the gener ality of the foregoing
provisions, the State Government shall—
[(a) reduce the revenue deficit to nil in the four years starting from 01st April,
2011 and ending on 31st March, 2015;]1
(b) reduce revenue deficit as percentage of Gross State Domestic produ ct in
each of the financial years referred to a clause (a) in a manner consistent
with the goal set out in clause (a);
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1-Substituted by section 2 (i) of Uttarakhand Act No. 07 of 2011.
[(c) The fiscal deficit of the State will provide stability to the annual limit of three
percent of GSDP (Gross State Domestic Product). The State may get an additional
limit of two percent of GSDP (Gross State Domestic Product) for the year 2020 -
21, subject to the implementation of the following State level reforms-
(i) Increase up to 0.50 percent without any condition.
(ii) 1 percent in four tranches of 0.25 percent with each tranche linked to
clearly specified measureable reform as under:
(a) Implementation of One Nation One Ration Card System (0.25
percent);
(b) Ease of doing business reform (0.25 percent);
(c) Urban Local Body/Utility reforms (0.25 percent);
(d) Power Sector reforms (0.25 percent);
The detailed description of reform action is given in Annexure-1 & 2.
(iii) Remaining 0.50 percent increase may be obtained on undertaking 3 out of
the above 4 reforms given in para (ii).]1
(d) reduce fiscal deficit as percentage of Gross State domestic product in each of
the financial years referred to in clause (a) in a manner consistent with the goal
set out in clause (c);
(e) not to give guarantee for any amount exceeding the limit stipulated under
any rule or law of the State Government existing at the time of the coming
into force of this Act or any rule or law to be made by the State Gov ernment
subsequent to coming into force of this Act;
[(f) ensure that during the period of four financial years starting form 1 st April,
2011 and ending on 31 st March, 2015 the total estimated debt liability does not
exceed 41.10, 40.00, 38.50 and 37.20 percent respectively of its estimated
gross state domestic product:
Provided that revenue deficit and fiscal deficit may exceed the limits
specified under this sub -section due to ground or grounds of unforeseen demands
on the finance of the State Government due to internal security or natural
calamity, subject to the condition that the excess beyond limits arising due to
natural calamities does not exceed the actual fiscal cost that can be attributed to
the calamities:
1- Subs. by section 2 of UK Act no 24 of 2020.
Provided further that the ground or grounds specified in the first
proviso shall be placed before the State Legislature, as soon as possible, after it
becomes likely that such deficit amo unt may exceed the aforesaid limits, with
accompanying report stating the likely extent of excess, and reasons therefor;]1
[(g) The State Government shall constitute a committee under the chairmanship of
the Chief Secretary, to review the progress against above targets at least once every
six months.]2
Measures for
Fiscal
Transparency
5. (1) The State Government shall take suitable measures to ensure greater
transparency in its fiscal operation in public interest and minimize as far as
practicable in public interest, secrecy in the preparation of the annual budget.
(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 budge, disclose in a statement in the form as may be prescribe:-
(a) the significant changes in the accounting standards, policies and practices
affection or likely to effect the computation of prescribed fiscal
indicators;
(b) as far as practicable, and consistent with protection of public interest, the
contingent liabilities created by way of guarantees, the actual liabilities
arising out of borrowing by Public Sector Undertaking and Special
Purpose Vehicles and other equivalent instrument where liability for
repayment is on the State Government, allocation and commitments made
by the State Government having potential budgetary, implication
including revenue demand raised but not realized, tax expenditure; losses
incurred in providing public goods, and services through public utilities
and undertaking, li ability in respect of major works and contracts, and
subsidy payments and impact of the same on the fiscal position of the
State including in relation to the targets referred to in sub -section (3) of
section 4.
Measured to
enforce
compliance
6. (1) The Annual Budget and policies announced at the time of the budget, shall be
consistent with the objectives and targets specified in the Medium Term
Fiscal Policy for the coming and future years.
(2) The Minister In-charge of the Department of Finance, shall review, e very half
yearly, the trend in receipts and expenditure in relation to the budget, remedial
measured to be taken to achieve the budget targets, and place before the State
Legislature the outcome of such reviews. The review report shall be in such
form as may be prescribed.
1. Substituted by section 2 (iii) of Uttarakhand Act No. 07 of 2011.
2. Added by section 2 (iv) ibid.
(3) The review 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 chan ges by the
State Government; and
(c) the remedial measures the State Government proposes to take.
(4) Wherever 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, 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 authorized 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 the expenditure
charged on the consolidated fund of the State under clause (3) of Article 202
of the constitution:
Provided further that, while adhering to the fiscal years, the State
Government will give priority to protect certain expen diture defined in the
Medium Term Fiscal Restructuring Policy as “High Priority Development
Expenditure” (including, inter alia) from curtailment or may impose a recede
or partial curtailment.
(5) Whenever one or more supplementary estimates are presented to the State
Assembly, the State Government shall also present an accompanying
statement indicating the corresponding curtailment of expenditure and/ or
augmentation of revenue to fully offset the fiscal impact to the supplementary
estimates in relation to the budget targets of the current year and the Medium
Term Fiscal Policy objectives and targets for the future year.
Power to make
rules
7. (1) The State Government may, by notification, make rules for carrying out the
provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing powers
such rules may provide for all or any of the following matters, namely:-
(a) The fiscal indicator to be prescribed for the purpose of sub -section (2) of
section 3 and clause (a) of sub-section(2) of section 5;
(b) The term of the Medium Term Fiscal Policy referred to in section 3;
(c) Any other matter which is required to be, or may be prescribed.
Protection of
action taken in
good faith
8. No suit or prosecution or other legal proceeding shall be agai nst the State
Government or any officer of the State Government for any thing which is in
good faith don e or intended to be done under this Act or the rules made
thereunder.
Application of
other laws not
barred
9. The provisions of this Act shall be in addition to, and not in derogation of the
provision of any other law for the time being in force.
Power to remove
difficulties
10. (1) If any difficulty arises in giving effect to the provisions of this act, the State
Government may, be order published in t he Gazette make such provisions not
inconsistent with the provisions of this A ct as it may deem 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 State Assembly.
Annexure-‘1’
1. Implementation of One Nation One Ration Card System: This system will
ensure availability of ration to benef iciaries under National Food Safety Act (NFSA) and
other welfare schemes, especially the migrant workers and their families, at any Fair Price
Shop (FPS) across the country, and enable better targeting of beneficiaries, elimination of
bogus/duplicate/ineligible card holders. Thus it will enhance welfare and reduce leakage.
To ensure seamless inter -state portability of a ration card, Aadhar seeding of all ration
cards as well as biometric authentication of beneficiaries through automation of all Fair
prices shops (FPSs) with installation of electronic point of sale (e -poS) devices are
essential. Therefore, it has been decided to allow additional borrowing limit of 0.25 percent
of GSDP on completion of both of the following actions:
(i) Aadhar Seeding of all the ration cards and beneficiaries in the state.
(ii) Automation of all the FPSs in the State.
The State Should complete the above mentioned actions by 31 st December, 2020. The
States which complete them earlier, or have already completed them, can seek additiona l
borrowing limit immediately, Department of Food and public Distribution will be the
nodal Ministry to assess the progress of the State and recommend release of additional
borrowing limit. The last date for recommendation to reach Department of expenditur e
(DoE) is 15th January, 2021.
2. Implementation of District Level and Licensing Reforms for Ease of Doing
Business: Ease of Doing Business is an important indicator of investment friendly
business climate in the country and improvements in ease of doing business will enable
faster future growth of the state economy. Therefore, in order to incentivize
implementation of district level and licensing reforms for ease of doing business it has
been decided to allow additional borrowing limit of 0.25 p ercent of GSDP for the year
2020-21 on undertaking all the following actions by the State Government:
i. The State will complete the first assessment of ‘District Level Business
Reform Action Plan’ as intimated by Department for Promotion of Industry
and Internal Trade (DPIIT).
ii. The State will eliminate the requirements of renewal of
certificates/approvals/Licenses obtained by businesses for various activities
from the authorities at the State level as per list circulated by DPIIT.
(However, mere collection of reasonable fees with automatic non -
discretionary deemed renewal will be permissible if done in a transparent
online, non -discretionary & automatic manner.) To become eligible,
elimination of renewal at least of the specific items mentioned in the
Annexure-2 should be completed by 31st January, 2021.
iii. The State will implement computerized central random inspection system
under the Acts as per list circulated by DPIIT wherein allocation of
inspections inspectors is done centrally, the same inspector is not assigned
to the same unit in subsequent years, prior inspection notice is provided to
business owner, and inspection report is uploaded within 48 hours of
inspection. To become eligible, implementation of computerized central
random inspection system at le ast under the Acts mentioned in the
Annexure-2 should be completed by 31st January, 2021.
DPIIT will be the nodal ministry to assess the progress and recommend the
release of additional borrowing. The cut -off date for this will be 15 th
February, 2021.
3. Reforms for Strengthening local Bodies: To enable better public health and
sanitation as well as provision of good civic infrastructure, which in turn promote
economic growth and well-being, there is a pressing need to augment resources of urban
local bodies (ULBs) and urban utilities, it has been decided to allow additional
borrowing limit of 0.25 per cent of GSDP for the year 2020 -21 on undertaking the
following reforms by the State Government:
(i) The State Government will notify (a) floor rates of pro perty tax in ULBs
which are in consonance with the prevailing circle rates (i.e. guideline rate
for property Transactions) and (b) floor rates of user charges in respect of
the provision of water -supply, drainage and sewerage which reflect
current costs/past inflation.
(ii) The State will put in place a system of periodic increase in floor rates the
property tax/user charges in line with prices increases.
Ministry of Housing and Urban Affairs will be the nodal ministry to assess the
progress and recommend the release of additional borrowing limit. The cut -off date
for this will be 15th January, 2021
4. Power Sector Reforms: Robust Systemic reforms are required to be
undertaken by the State governments to ensure that the subsidies reach farmers/ intended
beneficiaries without leakage and to improve the health of the power sector, in addition
to alleviating the liquidity stress of the DISCOMS. It has been decided to allow
additional borrowing limit for the following actions in the manner given below:
(i) For reduction in Aggregate Technical & Commercial losses in a State as per
targets, an additional borrowing limit of 0.05 percent of its GSDP shall be
allowed.
(ii) For reduction in the gap between Average cost of supply and Average
Revenue Realization (ACS-ARR gap) in a State as per targets, an additional
borrowing limit of 0.05 percent of its GSDP shall be allowed. [Note: In
calculating the ACS -ARR gap, amounts remaining unpaid by state
Government/local bodies shall be deducted from the revenues.]
(iii) For introduction of direc t Benefit Transfer to all farmers in a states in lieu
of free electricity given to them, additional borrowing limit of 0.15 percent
of its GSDP shall be allowed. The State Government should put in place a
scheme whereby from the next financial year (2021 -22), cash is transferred
to the farmers through DBT instead of free electricity being provided to
them, where as charges of the electricity are paid to the DISCOMs by
farmers directly from the amounts given to them. To become eligible, the
state should (a) formulate the DBT schemes and (b) implement this scheme
at least in one district by 31st December, 2020.
The assessment of reduction in AT&C losses and in the ACS -ARR gap will be based on
self declaration by the state Government in January, 2021. However, any major variation
between this self declared figure and actual realization assessed later on, may affect the
borrowing entitlement adversely in the subsequent financial year (s). Ministry of power
would be the nodal ministry to assess the progress and r ecommend the release of
additional borrowing to DoE. The last date for recommendation to reach DoE is 31 st
January, 2021.
5. The state shall exhaust the aforesaid additional borrowing of 2 percent during the
year 2020 -21 (to the extent eligible) and it will not be allowed to carry forward to the
subsequent years.
Annexure-‘2’
Implementation of removal of renewals and central Inspection System
Renewals of :
1. Registration under shops & Establishment Act
2. License for contractors under provision of the Contrac ts Labour (Regulation and
Abolition) Act, 1970
3. License under The Factories Act, 1948
4. Registration Under Legal Metrology Act
5. Registration of establishment under the Inter State Migrant workmen (Regulation
of Employment and Conditions of Service) Act, 1979
6. Drug Manufacturing/Selling/Storage License
7. Trade License issued by Municipal Corporations.
Inspections under:
1. The Equal Remuneration Act, 1976
2. The Minimum wages Act, 1948
3. The Shops and Establishments Act
4. The Payment of Bonus Act, 1965
5. The Payment of Wages Act, 1936
6. The Payment of Gratuity Act, 1972
7. The Contract Labours (Regulation and Abolition) Act, 1970
8. The Factories Act, 1948
9. The Indian-Boilers Act, 1923
10. The Water (Prevention and Control of Pollution) Act, 1974
11. The Air (Prevention and Control of Pollution) Act, 1981
12. Inspection under Legal Metrology Act, 2009 and Rules.
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1- Ins. by Annexure 1 and 2 of UK Act no 24 of 2020.