Rajasthan act 007 of 2005 : The rajasthan fiscal responsibilities and budget management act, 2005

(1) This Act may be called the Rajasthan Fiscal Responsibility and Budget Management Act, 2005.

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(2) It shall extend to the whole of the State of Rajasthan.

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(3) It shall come into force on such date¹ as the State Government may, by notification in the Official Gazette, appoint in this behalf.

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1. 3 rd May, 2005, vide notification No. F.7(1A) FD-1(1)B/2004, S.O. 63 dated May 26, 2005, Rajasthan Gazette, Part 4(x)

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In this Act, unless the context otherwise requires, -

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(a) "annual budget" means the Annual Financial Statement laid before the House of the State Legislature under Article 202 of the Constitution of India;

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(b) "Consolidated Fund" means the Fund as defined in Article 266 (1) of the Constitution of India comprising all revenues received by the Government of Rajasthan, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by the Government in repayment of loans;

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(c) "current year" means the year preceding the year for which the annual budget, Medium Term Fiscal Policy Statement and the Fiscal Policy Strategy Statement are being presented;

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(d) "ensuing year" means the financial year for which the budget is being presented;

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(e) "Financial year" means the year beginning on the 1st April and ending on 31st March next following;

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(f) "fiscal deficit" means the excess of total disbursements from the consolidated Fund of the State (excluding repayment of debt) over the sum of revenue receipts, recovery of loans and non-debt capital receipts into the Fund during a financial year;

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(g) "fiscal indicators" means such indicators as may be prescribed for evaluation of the fiscal position of the State Government;

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(h) "fiscal targets" means the numerical ceiling prescribed in either absolutes (in Rupees crore) or as proportions to the Gross State Domestic Product or other magnitudes for the fiscal indicators;

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(i) "guarantees" means the liabilities (except outstanding guarantees against State Insurance and Provident Fund, which are included in total explicit liabilities), undertaken by State Public Sector Undertakings or Special Purpose Vehicles, where servicing and repayment liabilities fall on the State Government in the event of default by the primary borrower;

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(j) "prescribed" means prescribed by the rules made under this Act;

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(k) "Public Sector Undertaking" means the enterprises having equity contribution of more than 50 from the Government of Rajasthan, whether departmental or non-departmental;

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^{2 3 4} "(kk) Rajasthan Development and Poverty Alleviation Fund means a Fund created under section 6A;"

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(l) "Reserve Bank" means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (Act No. 2 of 1934);

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(m) "revenue deficit" means the amount of excess of revenue expenditure over revenue receipts in a financial year;

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(n) "Special Purpose Vehicle" means the instruments set up for financing of investments through borrowings not routed through the annual budget of the Government of Rajasthan; (o) "State" means the State of Rajasthan;

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(p) "total liability" means the explicit liabilities under Consolidated Fund of the State and the Public Account of the State including General Provident Fund.

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2. Clause (kk) of section 2 inserted by The Rajasthan Finance Act No. 4 of 2007 vide notification dated 10.04.2007

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3. Clause (kk) of section 2 deleted by The Rajasthan Finance Act No. 13 of 2009 vide notification dated 12.08.2009

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4. Clause (kk) of section 2 inserted by The Rajasthan Finance Act No. 14 of 2014 vide notification dated 31.07.2014

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The State Government shall-

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(a) take appropriate measures to eliminate the revenue deficit and contain the fiscal deficit at sustainable levels;

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(b) pursue non-tax revenue policies with due regard to cost recovery and equity;

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(c) lay down norms for prioritisation of capital expenditure, and pursue expenditure policies that would provide impetus for economic growth, poverty reduction and improvement in human welfare.

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The State Government shall be guided by the following fiscal management principles, namely :-

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(a) transparency in setting the fiscal policy objectives, in implementation of public policy and in publication of State Government accounts so as to allow the public to scrutinize the conduct of fiscal policy and the State of public finances as set out in section 7 of this Act;

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(b) stability upto a reasonable degree and predictability in the fiscal policy making process;

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(c) responsibility in the management of public finances.

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(1) The State Government shall in each financial year lay before House of the State Legislature the following statements of fiscal policy along with the annual budget, namely:-

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(a) Medium Term Fiscal Policy Statement; and

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(b) Fiscal Policy Strategy Statement. (2) The Medium Term Fiscal Policy Statement shall set forth the fiscal objectives and strategic priorities of the state Government with clear enunciation of underlying assumptions.

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(3) In particular 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 -

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(a) the balance between revenue receipts and revenue expenditures;

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(b) the use of capital receipts including borrowings for generating productive assets;

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(c) the estimated yearly pension liabilities worked out on actuarial basis, for the next ten years:

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Provided that for a period of five financial years from the commencement of this Act, pension liabilities may instead of working out on actuarial basis, be estimated by making forecasts on the basis of trend growth rates.

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(4) Fiscal Policy Strategy Statement shall, inter alia, contain-

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(a) the fiscal policies of the State Government for the ensuing financial year relating to revenue receipts, expenditure, borrowing and other liabilities including guarantees, lending and investments, user charges on public goods/utilities and description of other activities, such as guarantees and activities of public sector undertakings which have potential budgetary implications;

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(b) the strategic priorities of the State Government in the fiscal area for the ensuing financial year;

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(c) key fiscal measures and the rational for any major deviation in fiscal measures pertaining to revenue receipts, subsidy, expenditure, administered pricing, borrowings, and other liabilities including guarantees;

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(d) evaluation of the current policies of the State Government vis-a-vis the fiscal management principles set out in section 4 and the fiscal objectives set out in the Medium Term Fiscal Plan.

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(1) The State Government shall take suitable measures to ensure greater transparency in its fiscal operations and minimise, as far as practicable in the public interest, secrecy in the preparation of the Annual Budget.

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(2) In particular, and without prejudice to the generality of the foregoing provision, the State Government shall, at the time of presentation of the annual budget, disclose in a statement in the form as may be prescribed,-

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(a) in case of a change, the significant changes in the accounting standards, policies and practices affecting or likely to affect the computation of prescribed fiscal indicators;

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(b) details of borrowings, ways and means Advances/Overdrafts availed of from the Reserve Bank of India;

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(c) the estimated yearly pension liabilities worked out on an actuarial basis for the next ten years:

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Provided that for a period of five financial years from the commencement of this Act, pension liabilities may instead of working out on actuarial basis, be estimated by making forecasts on the basis of trend growth rates.

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As soon as may be after the commencement of the Act, the Government may, by notification in the Official Gazette, appoint a Committee to be called the Public Expenditure Review Committee with the following features:-

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(a) The Committee shall consist of not more than five members with professional expertise in the fields of Finance, Economic Management, Planning, Administration, Accounts and Audit and Law;

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(b) The terms and conditions of service of the members of the Committee and functions and duties of the Committee shall be such as may be prescribed.

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(1) The annual budget and policies announced at the time of the budget shall be consistent with objectives and targets specified in the Medium Term Fiscal Policy for the ensuing and future years.

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(2) The Minister-Incharge of the Department of Finance, shall review, after every six months, the trends in receipts and expenditure in relation to the budget and remedial measures to be taken to achieve the budget targets. The review report shall be in such form as may be prescribed and shall explain-

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(a) any deviation or likely deviation in meeting the obligations cast on the State Government under this Act;

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(b) the remedial measures, the State Government proposes to take.

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(1) The State Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.

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(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:-

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(a) the form in which Medium Terms Fiscal Policy Statement shall be prepared;

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(b) the form of the Fiscal Policy Strategy Statements;

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(c) the form of Statement in which State Government shall disclose information required to be disclosed under sub-section (2) of section 7;

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(d) terms and conditions of service of members of the committee constituted under section 8 and functions and duties of the committee;

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(e) the form of review report under sub-section (2) of section 9;

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(f) measures to enforce compliance of the targets enumerated in section 6;

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(g) any other matter which is required to be, or may be, prescribed.

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(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:

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Provided that no order shall be made under this section after the expiry of three years from the commencement of this Act.

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(2) Every order made under this section shall be laid, as soon as may be after it is made, before the House of the State Legislature.

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