Passed in Hindi by the Himachal Pradesh Vidhan Sabha. For Statement of

Objects and Reasons see the Rajpatra, Himachal Pradesh (e-Gazette), dated 6 th

January, 2023, pp. 8684 and 8686.

THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005

1. (2) It shall come into force on such date 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 the State Legislative Assembly under article 202 of the Constitution ;
   • (b) “current year” means the financial year preceding the ensuing year;
   • (c) “debt receipt” shall have the same meaning as used in the finance accounts of the State by Comptroller and Auditor General;
   • (d) “ensuing year” means the financial year for which the budget is being presented;
   • (e) “financial year” means the year commencing on the first day of April;
   • (f) “fiscal indicators” means the numerical ceilings and proportions to gross state domestic product, of such measures, as may be prescribed, for evaluation of the fiscal position of the State Government;
   • (g) “fiscal deficit” means the excess of total disbursements from the Consolidated Fund of the State, excluding repayment of debt, over total receipts into the Consolidated Fund, excluding the debt receipts, during a financial year;

Explanation.- For the purpose of calculation of fiscal deficit,

borrowings by Public Sector Undertakings and Special Purpose Vehicles and other equivalent instruments, where the liability for repayment is on the State Government are to be treated as borrowings of the State Government;

1. (h) “prescribed” means prescribed by the rules made under this Act;
   • (i) “revenue deficit” means the difference between revenue expenditure and revenue receipts;
2. (j) “State” means the State of Himachal Pradesh; and
3. (k) “State Government” means the Government of Himachal Pradesh.

1. Act came into force from 1

st May, 2005 vide Notification No. Fin. Comm. D (4)- 1/2004 dated 12 th

May, 2005, published in the Rajpatra, Himachal Pradesh

(Extra-ordinary), dated 13 th May, 2005, p. 720.

THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005

CHAPTER-II LAYING OF MEDIUM TERM FISCAL PLAN IN THE LEGISLATIVE ASSEMBLY, FISCAL MANAGEMENT PRINCIPLES AND TARGETS AND MEASURES TO ENFORCE COMPLIANCE. 3. Medium term fiscal plan to be laid before the Legislature.- (1)

The medium term fiscal plan shall include an assessment of sustainability

relating to,-

1. (a) the balance between revenue receipts and revenue expenditures;
2. (b) use of capital receipts including borrowings for generating productive assets;
3. (c) an evaluation of the 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 year as per revised estimates;
4. (d) a statement on the recent economic trends and future prospects for growth and development affecting fiscal position of the State Government; and
5. (e) the strategic priorities of the State Government in the fiscal area for the ensuing financial year.

1. (2) The medium term fiscal plan shall set forth a four year rolling target for the fiscal indicators prescribed, with specification of underlying assumptions.
2. (3) The State Government shall in each financial year lay before the State Legislative Assembly a medium term fiscal plan alongwith the annual budget.
3. (4) The medium term fiscal plan shall be in such form as may be prescribed.

4. Fiscal management principles.- (1) The State Government shall

take appropriate measures to reduce the revenue deficit and manage the debt consistent with fiscal stability.

1. (2) The State Government shall be guided by the following fiscal management principles, namely: -
   • (a) to maintain State 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 State Government have due regard to their financial implications on future generations; THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005
   • (d) to ensure a reasonable degree of stability and predictability in the level of the tax burden;
   • (e) to maintain the integrity of the tax system by minimizing special incentives, concessions and exemptions;
   • (f) to pursue tax policies with due regard to economic efficiency and compliance costs;
   • (g) to pursue non-tax revenue policies with due regard to cost recovery and equity;
   • (h) to ensure that physical assets of the State Government are properly maintained; and
     • (i) to disclose sufficient information to allow the public to scrutinize the conduct of fiscal policy and the state of public finances.

5. Fiscal management targets.-

1[(1) In particular and without prejudice to the generality of the foregoing provisions, the State Government shall-

2[(i) eliminate revenue deficit and maintain revenue surplus thereafter;]

3[(ii) maintain fiscal deficit of 6 percent or less of Gross State Domestic Product in the Financial Year 2022-23, 3.5 percent or less of Gross State Domestic Product in the Financial Years 2023-24 and 2024-25 and at the level of 3 percent or less of Gross State Domestic Product thereafter: Provided that interest free loan for a term of fifty years under the “Scheme for Special Assistance to States for Capital Expenditure” of the Central Government for financing infrastructure projects of the State, shall be allowed over and above all limits specified for fiscal deficit debt stock: Provided further that the fiscal deficit may exceed the prescribed limit if any unutilized borrowing of previous financial year is carried forward to subsequent financial year(s);]

4[(iii) reduce outstanding debt to level of such percentage of Gross

State Domestic Product, as may be prescribed; and]

1. Sub-section (1) substituted vide H.P Act No. 26 of 2005, again Sub-sections (1)

substituted vide H.P Act No. 25 of 2011.

2. Clause (i) substituted vide H.P Act No. 1 of 2023.

3. Clause (ii) amended vide H.P. Act No. 4 of 2021, 15 of 2022 and again substituted vide H.P Act No. 1 of 2023.

4. Clause (iii) substituted vide H.P Act No. 1 of 2023.

THE HIMACHAL PRADESH FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005

1. (iv) maintain outstanding risk weighted guarantees on long term debt below forty per cent of total revenue receipt in the preceding financial year for which actuals are available as per finance accounts. 1[(2) Notwithstanding anything contained in sub-section (1), the targets under different parameters of clauses (i), (ii) and (iii) of sub-section (1), may be exceeded in case of,-

1. (a) unforeseen demands on the finances of the State Government due to reasons of national security or natural calamity declared by the Central Government or the State Government, as the case may be; or
2. (b) due to increase in developmental and other unavoidable expenditure; or
3. (c) when increased borrowing limit, if any, is allowed by the Central Government from time to time: Provided that a statement in respect of the ground or grounds specified under this sub-section shall be placed before the Legislative Assembly, as soon as may be, after such deficit amount exceeds the aforesaid targets.]