(1) This Act may be called the Kerala Fiscal Responsibility Act, 2003.
(2) It shall come into force, on such date as the Government may, by notification in the Gazette, appoint.
2. Definitions-In this Act, unless the context otherwise requires,-
(a) ‘annual budget’ means the annual financial statement laid before the Legislative Assembly under article 202 of the Constitution of India;
(b) ‘committee’ means public expenditure review committee constituted under sub section (1) of section 6.
(c) ‘current year’ means the year preceding the year for which the budget and medium term fiscal policy are being presented.
(d) ‘fiscal deficit’ means the excess of total expenditure of the Government over the total receipts and represents the borrowing requirements, and net of repayment of debt of the Government during the year, calculated as prescribed by the Comptroller and Auditor General of India.
(e) ‘fiscal indicators’ means measures such as numerical ceilings and proportions to gross state domestic products as may be prescribed for evaluation of the fiscal position of the State Government;
(f) ‘Government’ means Government of Kerala;
(g) ‘medium term fiscal framework’ means the frame work drawn up by the Government for a five year period from the financial year on which this Act shall come into force with the objective of progressively eliminating the Revenue Deficit;
(h) ‘prescribed’ means prescribed by rules under this Act;
(i) ‘previous year’ means the year preceding the current year;
(j) ‘revenue deficit’ means the difference between revenue expenditure and revenue receipts and implies increase in the liabilities of the State without corresponding increase in the assets of the State calculated as prescribed by the Comptroller and Auditor General of India;
(k) ‘State’ means the State of Kerala;
(l) ‘total liabilities’ means liabilities upon the Consolidated Fund and public account of the State;
(m) ‘triggers’ means the intra year bench marks on deficit.
3. Fiscal Policy Statement to be laid before the Legislative Assembly –
(1) The Government shall lay in every financial year before the Legislative Assembly along with the annual budget, a medium term fiscal policy statement and a fiscal policy strategy statement.
(2) The medium term fiscal policy statement shall set forth a three year rolling target for 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 policy statement shall include assessment of sustainability relating to -
(a) the balance between revenue receipts and revenue expenditure;
(b) use of capital receipts including open market borrowings for generating productive assets.
(4) the fiscal policy strategy statement shall, interalia, contain, -
(a) policies of Government for the ensuing financial year relating to taxation, expenditure, borrowings and other liabilities, lending and investment and such other activities like underwriting and guarantees which have potential budgetary implications:
(b) the strategic priorities of the Government for the ensuing financial year in the fiscal area;
(c) evaluation as to how current policies of the Government are in conformity with the fiscal management principles as set out in section 4 and the objectives set out in medium term fiscal policy statement.
4. Fiscal Management Principles- (1) The Government shall take appropriate measures to reduce the revenue deficit and build up an adequate revenue surplus by following such principles as may be prescribed.
* (2) In particular and without prejudice to the generality of the foregoing provision, the Government shall eliminate the revenue deficit completely during the period from 2017-2018 to 2019-2020 and shall,-
(a) build up surplus amount of revenue and utilize such amount for discharging liabilities in excess of assets;
(b) maintain the fiscal deficit to 3 per cent of the Gross State Domestic Product during the period from 2017-2018 to 2019-2020;
Note:- (i) State shall be eligible for additional reduction of 0.25 per cent over and above this, for any given year for which the borrowing limits are to be fixed if the ratio between the Gross State Domestic Product and debt is less than or equal to 25 per cent in the preceding year;
(ii) State may further be eligible for additional borrowing limit of 0.25 per cent of Gross State Domestic Product in a given year for which the borrowing limits are to be fixed if the interest payments are less than or equal to 10 per cent of the revenue receipts in the preceding year;
(iii) If anyone of the above said criteria is fulfilled, the State may utilise the said concessions either separately or if both are fulfilled the said concessions together may be utilized by the State. The maximum ratio between the fiscal deficit and Gross State Domestic Product in a prescribed year may be up to 3.5 per cent to the State accordingly;
(iv) The reductions in availing the additional limit under either of the two options or both will be available to the State only if there is no revenue deficit in the year in which borrowing limits are to be fixed and in the immediately preceding year.
The ‘additional fiscal space’ availing in such manner shall be utilised for the State share of the Centrally Sponsored Schemes.
(c) reduce the total debt liabilities of the State in the years of 2017-2018, 2018- 2019 and 2019-2020 in the order of 30.40 per cent, 30.01 per cent and 29.67 per cent respectively of the Gross State Domestic Product.