State Act

The Uttarakhand fiscal responsibility and Budget Management Act

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 guarantees and other contingent liabilities prudently, with particular reference to the quality and level of such liabilities; (c) To ensure that policy decisions of the 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 generality 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 product in each of the financial years referred to a clause (a) in a manner consistent with the goal set out in clause (a); [(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 Government subsequent to coming into force of this Act; [(f) ensure that during the period of four financial years starting form 1st April, 2011 and ending on 31st 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: 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 amount 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