The Jharkhand Fiscal Responsibility and Budget Management Act, 2007

(i) This Act may be called the Jharkhand Fiscal Responsibility and Budget Management Act, 2007. (ii) It shall extend to the whole State of Jharkhand. (iii) It shall come into force on such date as the State Government may, by notification in the Official Gazette, appoint.

In this Act, unless the context otherwise requires: (i) "Budget" means the Annual Financial Statement presented before the State Legislature under clause (1) of Article 202 of the Constitution of India; (ii) "Current Year" means the financial year for which the budget and medium-term fiscal plan is being presented; (iii) "Financial Year" means the year beginning on 1st April and ending on 31st March of the next year; (iv) "Fiscal Deficit" means the excess of total disbursement from the Consolidated Fund of the State (excluding debt repayment) over total receipts (excluding debt receipts) during a financial year; (v) "Fiscal Indicator" means such numerical value as may be prescribed for evaluation of the fiscal position of the State Government, such as numerical ceiling and ratio of Gross State Domestic Product; (vi) "Non-Interest Committed Revenue Expenditure" means the sum of salary and pension expenditure of the State in the revenue accounts of the State Consolidated Fund; (vii) "Extra-Budgetary Borrowing" means the borrowing of the State Government or its agency which is not reflected in the Financial Statement; (viii) "Prescribed" means prescribed by rules framed under this Act; (ix) "Previous Year" means the year preceding the current year; (x) "Primary Deficit/Surplus" means fiscal deficit/surplus excluding interest; (xi) "Reserve Bank" means the Reserve Bank of India established under the Reserve Bank of India Act, 1934; (xii) "Revenue Deficit" means the difference between revenue receipts and revenue expenditure which indicates the increase in liabilities of the State Government without corresponding increase in assets of the State Government; and (xiii) "Total Liabilities" means the liabilities under the Consolidated Fund of Jharkhand and the Public Account of the State.

(1) The State Government shall present a medium-term fiscal plan along with the Annual Financial Statement in the State Legislature every financial year. (2) The medium-term fiscal plan shall set a three-year rolling target for prescribed fiscal indicators with a clear specification of underlying assumptions. (3) The medium-term fiscal plan shall, in particular, include the determination of sustainability relating to the following, without prejudice to the provisions contained in sub-section (2): (i) balancing between revenue receipts and revenue expenditure; (ii) use of capital receipts including market loans for the creation of productive assets; (iii) medium-term fiscal objective of the State Government; (iv) evaluation of the performance of fiscal indicators of the previous year against the targets set earlier and estimated performance in the current year in the light of the revised estimates; (v) fiscal policy priorities of the State Government for the current financial year; and (vi) fiscal policies of the State Government for the current financial year relating to expenditure, borrowing and other liabilities, lending and investments and other activities, such as guarantees and activities of public sector undertakings, for which potential budgetary implications exist. (4) The medium-term fiscal plan shall be in such form as may be prescribed.

(I) The State Government shall take appropriate measures to eliminate the revenue deficit and keep the fiscal deficit at a self-sustaining level and shall, through the measures specified below, provide for sufficient revenue surplus: (a) maintain government debt at a prudent level; (b) prudent management of guarantees and other contingent liabilities, specially with reference to the risk profile of such liabilities; (c) determination of the State Government's policy keeping in view the fiscal effects on future generations; (d) borrowing to be used for productive purposes and for the creation of capital assets and not for meeting current expenditure; (e) keeping a rational stability and estimation with reference to the tax burden; (f) avoiding special incentives, concessions and tax exemptions with the objective of maintaining the fairness and stability of the tax system; (g) implementation of tax policies keeping in view the economic capacity and compliance cost; (h) following non-tax revenue policies keeping in view cost recovery and equity; (i) following such expenditure policies as to encourage economic development and poverty alleviation; (j) creation of revenue surplus for capital formation and use for productive expenditure; (k) proper maintenance of the government's physical assets; (l) providing sufficient information on the purpose of fiscal policy and the state of public finance for public review; (m) using government resources in such a way as to provide the best value for money, as well as the best use of government assets; (n) minimizing fiscal risks in the operation of public undertakings and public services providing public assets and services; (o) maintaining expenditure at the level of generated revenue; (p) preparing realistic and objective budgets, giving due importance to the general economic scenario and the real revenue perspective, and minimizing deviations within the year; and (q) taking appropriate measures in the context of cash management system to keep the gap within the limits of resources so that situations of frequent overdrafts from the Reserve Bank of India do not arise and the cash deficit can be gradually reduced year after year.

(i) Without prejudice to the generality of the previous provisions, the State Government shall ensure: (a) to reduce the revenue deficit to zero by the end of 31st March, 2009; (b) to reduce the fiscal deficit to a maximum of three percent of the estimated Gross State Domestic Product by the end of 31st March, 2009; (c) to reduce the fiscal deficit by the specified percentage of the Gross State Domestic Product every financial year so that the target specified in sub-clause (b) can be achieved; (d) to prepare a surplus of more than 3 percent of the Gross State Domestic Product by the year ending 31st March, 2008; (e) Other important monitorable fiscal targets shall be as follows: (i) by the year ending 31st March, 2008, the percentage of salary in relation to State revenue should be reduced to 80 percent; (ii) by the year ending 31st March, 2008, non-interest committed revenue expenditure in relation to State revenue and assigned revenue should be reduced to 55 percent; and (iii) by the year ending 31st March, 2009, the ratio of State revenue receipts and revenue deficit should be reduced to 0 percent; (p) interest payments should be limited to 18 to 25 percent of revenue receipts to bring debt to a self-sustaining level; (N) total debt of the State by the end of the financial year 2007-08 should be limited to 300 percent of the total receipts of the State. Provided that if there is an unforeseen demand on the State's finances due to a natural calamity, the revenue deficit and fiscal deficit may exceed the limit specified in this section, but the extra expenditure due to the above-mentioned reasons shall not exceed the actual financial cost. Provided also that the specific purpose(s) for which fiscal deficit is likely to increase and the report, reasons, etc. related to exceeding the specified limit of the deficit shall be presented before the Legislative Assembly as soon as possible. [Note: Amendment Act 2015 inserts/supersedes 5(1)(b) to read: "For the financial years 2015-16 and 2016-17, the fiscal deficit be limited to 3.50 percent of the estimated Gross State Domestic Product and for the financial years 2017-18, 2018-19 and 2019-20, up to 3.25 percent. Loans taken from the open market in the financial years 2015-16 and 2016-17 for financial restructuring and development of the State's electricity distribution company (DISCOM) under the Central Government's sponsored scheme UDAY will be outside the above conditions."]

(i) The State Government shall take appropriate measures to ensure maximum transparency in its fiscal operations in the public interest and to minimize confidentiality to the extent possible in the preparation of the Annual Financial Statement, but the State Government shall have the power to maintain the confidentiality of any such fact as would adversely affect the fiscal management of the State if made public. (ii) At the time of presentation of the budget, the State Government shall publish a statement regarding significant changes in accounting standards, policies, and practices, and policies and practices that affect or are likely to affect the calculation of fiscal indicators. (iii) A consolidated position in relation to all demands shall be shown in "Budget at a Glance". (iv) The calculation of the estimated annual pension liability for the next 10 years shall be done on an actual basis. (v) New policies included in the annual budget should be clearly mentioned. (vi) Budget information shall be presented in such a form as to be helpful in promoting policy analysis and discharge of liability. (vii) Detailed information regarding revenue arrears (both tax and non-tax revenue) shall be presented separately as an annexure to the Receipt Budget. (viii) Allocation of funds shall be done on the basis of the priority so that the completion of ongoing schemes can be ensured as per the scheduled time. The State Government shall present a list of projects related to zero-based investment review, their scheduled date of completion, and reasons for deviation in previous years, if any. (ix) The statement, which includes the list of guarantees given by the State Government institution-wise, inability of the concerned institution to pay the debt, and the liability of the State Government to pay the debt under the given guarantee, shall be presented by the Government in the State Legislative Assembly. This statement will also show the escrow account etc. opened by public undertakings/co-operative societies/urban local bodies. (x) A special statement regarding the number of employees of the government, public sector, and aided institutions and their salaries etc. shall be presented with the budget. (xi) The budget document shall contain details regarding tax exemptions and remissions in a financial year. (xii) The State Government shall publish advance information regarding debt and financial assets. The information related to debt will include maturity and interest rate. (xiii) A report regarding the implementation of the budget and the achievement of financial targets/indicators shall be presented in the Legislature.

(I) While presenting the annual budget for the current financial year, the State Government shall present a statement of delayed liabilities on the following items: (i) non-provision of contribution by the State Government for centrally sponsored schemes in the previous years and deficit in this head in the current financial year; (ii) non-encashment of bills presented in treasuries by the end of the previous financial year; (iii) non-utilization of central assistance received by the end of any specific financial year; (iv) unspent amount lying in Civil Deposit.

(1) The Annual Budget and the policies announced at the time of the budget should be in accordance with the objectives and targets of the medium-term fiscal plan of the coming years. (2) The Minister-in-charge of the Finance Department shall review the trends of receipts and expenditure in the context of the budget and the expected remedial measures to be taken for the achievement of the targets set in the budget. (3) If there is a revenue deficit in any year in accordance with the policy decisions taken by the State Government, the said deficit shall be adjusted in the next year or in the coming next years or some other decision may be taken for the increase of total revenue receipt to adjust this revenue deficit, or both the above methods may be adopted by the State Government. Provided that no provision of 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 of India. (4) When the revenue deficit and fiscal deficit increase due to unforeseen demands on the State's finances, the Government shall identify the net fiscal expenditure on disasters and may put a stop on the expansion of compliance with such expenditure to the specified limit. (5) Whenever any supplementary estimate is presented before the Legislative Assembly, the State Government shall also present a statement regarding the reduction in expenditure accordingly so that the financial effectiveness of the supplementary estimates can be neutralized in view of the budget targets of the current year and the objectives of the medium-term fiscal plan. (6) No liability other than the budgetary provisions of the financial year shall be created without the approval of the Finance Department of the Government. Unauthorized liability created in this manner shall be considered as utter negligence and the concerned officer(s) creating such liability shall be personally responsible.

(1) The State Government may, by notification in the Official Gazette, make rules for the implementation of the provisions of this Act. (2) Without prejudice to the generality of the previous powers, such rules may be made in the context of one or all of the following: (a) prescribing the fiscal indicators for the purpose of sub-section (2) of Section 3; (b) in the context of the medium-term fiscal policy plan under sub-section (1) of Section 3, and the strategy of fiscal policy under clause (N) of sub-section (3) of Section 3; (c) the type of statement under sub-section (ii) of Section 6; and (d) any other matter which is not inconsistent with the provisions of the Act.

Every rule made under this section of the Act shall be laid before the Legislative Assembly as soon as possible, when the session of the Legislative Assembly is in progress, before the end of the session, or immediately after the session.

No suit, prosecution or other legal proceeding shall be instituted against the State Government or their officers if any action is taken in good faith under the said Act or under the rules framed under this Act.

The provisions of this Act shall be in addition to the provisions of any law currently in force and not against them.

(1) If the State Government faces any difficulty in implementing the provisions of this Act, it may, through an order in the Official Gazette, make such rules as are necessary to remove this difficulty, provided that such rule is not inconsistent with the provisions of this Act. Provided that no order under this section shall be issued after two years of this Act coming into force. (2) Every order formed under this section shall be laid before the Legislative Assembly as soon as possible.