(1) The State Government shall in each financial year lay before the state Legislature a Medium Term Fiscal Plan along with the annual budget.
(2) The Medium Term Fiscal Plan shall set forth a four-year rolling target for the prescribed fiscal indicators with specification of underlying assumptions.
(3) In particular and without prejudice to the provisions contained in sub-section (2), the Medium Term Fiscal Plan shall include an assessment of sustainability relating to,
(i) the balance between revenue receipts and revenue expenditures;
(ii) the use of capital receipts including borrowings for generating productive assets.
(4) The Medium Term Fiscal Plan shall, inter alia, contain,
(a) the medium term fiscal objectives of the State Government;
(b) an evaluation of the performance of the prescribed fiscal indicators in the previous year vis-a vis the targets set out earlier, and the likely performance in the current year as per revised estimates;
(c) a statement on recent economic trends and future prospects for growth and development affecting fiscal position of the State Government;
(d) the strategic priorities of the State Government in the fiscal areas for the ensuing financial year
(e) the policies of the State Government for the ensuing financial year relating to taxation, expenditure, borrowings (including borrowings by Public Sector Undertakings and Special Purpose Vehicles and other equivalent instruments where liability for repayment is on the State Government, with ceiling fixed for each agency) and other liabilities, lending and investments, pricing of administered goods and services and description of other activities, such as guarantees and activities of Public Sector Undertakings which have potential budgetary implications; and the key fiscal measures and targets pertaining to each of these;
(f) an evaluation as to how the current policies of the State Government are in conformity with the fiscal management principles set out in section 4 and the fiscal objectives set out in the Medium Term Fiscal Plan.
(5) The Medium Term Fiscal Plan shall be in such Form as may be prescribed.
[(6) (1) Medium Term Fiscal Plan (MTFP) shall contain three-year-forward estimates of revenues and expenditure, with detailed breakup ofmajor items, and a narrative explanation of how these estimates have been generated. These estimates should be in broad conformity with thefiscalparameters recommended by FC-XJ/I. The intent should be to ensure a tighter integration between the multi-yearframework and annual Budget exercise provided byMTFP into the State's budget and theMTFP shall, rather than a statement ofintent be a statement of commitment.]
(2) Thefollowing disclosures shall be made along with the annual budget UMTFP:
( a) Detailed breakup ofCentral grants to States into constituentflows.
(b) Statement on tax expenditure to be systematized and the methodology to be made explicit.
(c) Compliance costs ofmajor tax proposal to be reported
(d) Revenue Consequences of Capital Expenditure (RCCE} to be projected in MTFR along with related liabilities, physical andfinancial assets and vacantpublic land and buildings.
(e) Future expenditure commitments ofmajor policy changes to be incorporated inMTFP (I) Liabilities explicit and implicit in Public Private Partnerships to be reported in theMTFP
(g) MTFP to make explicit the values ofparameters underlying projections for receipts and expenditure and the band within which they can vary while remaining consistent with targets.]
Fiscal Management Principles