(1) The State Government will be guided by the following fiscal management principles:
(a) maintain Government debt at prudent levels;
(b) manage guarantees and other contingent liabilities prudently, with particular reference to the quality and level of such liabilities;
(c) ensure that policy decisions of the Government have due regard to their financial implications on future generations;
(d) ensure that borrowings are used for productive purposes and accumulation of capital assets, and are not applied to finance current expenditure;
(e) ensure a reasonable degree of stability and predictability in the level of the tax burden
(f) maintain the integrity of the tax system by minimizing special incentives, concessions and exemptions;
(g) pursue tax policies with due regard to economic efficiency and compliance costs;
(h) pursue non-tax revenue policies with due regard to cost recovery and equity;
(i) pursue expenditure policies that would provide impetus for economic growth, poverty reduction and improvement in human welfare;
G) build up a revenue surplus for use u capital formation and productive expenditure;
(k) ensure that physical assets of the Government are properly maintained;
(I) disclose sufficient information to allow the public to scrutinize the conduct of fiscal policy and the state of public finances;
(m) 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) minimize fiscal risks associated with running of public sector undertakings and utilities proving public goods and services;
(o) manage expenditure consistent with the level of revenue generated;
(p) formulate budget in a realistic and objective manner with due regard to the general economic outlook and revenue prospects, and minimize deviations during the course of the year and
(q) ensure discharge of current liabilities in a timely manner.
(2) The State Government shall take appropriate measures to eliminate the revenue deficit and contain the fiscal deficit at sustainable level and build up adequate revenue surplus.
(3) In particular, and without prejudice to the generality of the foregoing provisions, the State Government shall '[(a) Maintain the level ofrevenue surplus in all theyears beginningfrom the initialfinancial year on l"April 2015 and ending 31stMarch 2020.
(b) Maintain revenue surplus as a percentage of Gross State Domestic Product (GSDP} in each ofthefinancial year beginning on the 1st day ofApril 2015 and ending on 31st March 2020 in a manner consistent with the goal set out.
(c) to reducefiscal deficit to not more than 3%percent ofthe estimated Gross State Domestic Product (GSDP}for theyears 2015-16 which is the awardperiod of14"Finance Commission.
(d) Maintain debt GSDP ratio less than 25 or equal to 25% in the preceding year to avail the additional borrowing of0.25per cent ofGSDP.
(e)Maintain the interestpayment to the level ofless than or equal to 10percent ofthe revenue receipts in the preceding year to avail the additional borrowing limit of0.25 percent ofGSDP in a given yearfor which the borrowing limits are to befixed.
(I) The flexibility in availing the additional limit under either oftwo options or both will be available to the state only if there is no deficit in the year in which borrowing limits are to be fixed and immediatelyprecedingyear.
(g) Ifthe state is not able tofully utilize its sanctioned borrowing limit of3% ofGSDP in any particular year of the award period of 14 Finance Commission(2015-16 to 2018-19} it will have the option ofavailing this unutilized borrowing amount only in thefollowing year but within the awardperiod ofthe 14th Finance Commission/.
Provided that 1[revenue surplus may decrease/ and fiscal deficit may exceed the limits specified under this sub-section due to ground or grounds of unforeseen demands on the finances of the Slate Government due to national 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 House of Legislature, as soon as may be, alter it becomes likely that such deficit amount may exceed the aforesaid limits, with an accompanying report stating the likely extent of excess, and reasons therefore.
**(i) From and out ofthe Gross State Domestic Product (GSDP), there shall be allowed an additional borrowing oftwo percent to the State Government in thefinancial year 2020-21 to fight Covid-19 Pandemic which had a serious negative impact on the resources ofthe State Government.
Provided that, the additional borrowing shall be subject to maintaining standards of service delivery to thepublic to strengthen resources in the hands ofState Government.
Provided further that, the relaxation limits shall be partly unconditional and partly conditional as specified in Table 'A' and two percent ofGSDP as specified in Table 'B'.
Table 'A' SI. No.
(a) Particulars Conditional:
(i) Implementation of One Nation One Ration Card System
(ii) Ease of doing business reform
(iii) Urban Local Body/Utility Reforms
(iv) Power Sector Reforms b) (i) 50% of 1 % Unconditional (Untied)
(ii) 50% of 1% Conditional (subject to providing undertaking of at least 3 of the reforms at SI. No. a (i) to (iv) Conditional
0.25%
0.25%
0.25%
0.25%
0.50% Unconditional
0.50% Table 'B (Rs. in Crore) SI. No. Particulars Conditional Unconditional
(a) Conditional:
(i) Implementation of One 71.225 Nation One Ration Card System
(ii) Ease of doing business 71.225 Reform
(iii) Urban Local Body/Utility 71.225 Reforms iv) Power Sector Reforms 71.225
(b) (i) 50% of 1% Unconditional 142.450 (Untied)
(ii) 50% of 1% Conditional 142.450 (subject to providing undertaking of at least 3 of the reforms at SI. No. a (i) to (iv) (C) Entitlement 427.350 142.450 (Conditional & Unconditional)
(d) Total Entitlement 569.80 (427.35 Crore+142.45 Crore) **( inserted byAct no. 3 of2021, .s.2 we.f 17.05.2020) Measures for Fiscal Transparency