Fiscal Management Principles

(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; (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 as a percent GSDP (Gross State Domestic Product) for the financial year 2021-22, 2022-23, 2023-24, 2024-25 and 2025-26 shall not exceed 4.0, 3.5, 3.0, 3., 3.0 and 3.0 respectively. (d) The consistent compliance with the goal setup in clause (c) shall reduce fiscal deficit as percentage of Gross State Domestic Product; (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) (i) Total liabilities as a percent of Gross State Domestic Product (GSDP) for the financial Year 2021-22, 2022-23, 2023-24, 2024-25 and 2025-26 shall not exceed 32.6, 33.3, 33.1, 32.8 and 32.5 respectively. (ii) If State is not able to fully utilize its sanctioned borrowing limit, in any particular year during the first four years of 15th Finance Commission (2021-22 to 2024-25), the State may utilize this unutilized amount in any of the subsequent years within the stipulated time period of the 15th Finance Commission: Provided that revenue deficit and fiscal deficit may exceed the limit 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 shall not exceed the actual fiscal cost that may be attributed to the calamities: Provided further that the ground or grounds specified in the first provisio shall be placed before the State Legislature, as soon as possible, after it becomes likely that deficit amount may exceed the aforesaid limits, with accompanying report stating the likely extend excess, and reasons thereof.