TRIPURA ACT NO. 7 OF 2005 Aa THE TRIPURA FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005 Published in the Extra-ordinary issue of Tripura Gazette.
Agartala, Monday, June 27, 20035 A, D. Asadha 6, 1927 SOE 4 Government of Tripura Law Department No. F.8 (16}-Law/Leg/2005 Dated, Agartala, the 25" June, 2005 NOTIFICATION The following Act of the Tripura Legislative Assembly receivec| the assent of the Governor on the 24" day of June, 2005 and is hereby published for general informat on.
§.C.Das secretary Government of Tripure.
Tripura Fiscal Responsibility and Budge’: Managemen:
Act ) 2005.
The Act provides for the responsibility of the S ate Governnient to ensure prudence in fiscal management and fiscal stability bv progressive elimination of revenue deficit, reduction in fiseal deficit. prudent debt management consistent with fiscal sustainability, greater transparency in fiscal operations of the Government and conduct of fiscal policy in a médium term framework ancl for niatters. connected therewith or incidental theres.
Be it enacted by the Tripura State Legislature i1 the year 2005 25 follows;- Ad de SHORT TITLE AND COMMENCEMENT (1} This Act may be called the Tripura Fiscal Responsibility and Budget Management Act, 2005.
(2) It stall come into force on such date as the State Governmer.t may by notification in the Official Gazett?, appoint in this behalf. s a DEFINITIONS In this Act, unless the context otherwise requires - a) “bucget” means the annual financial stater-nt laid before: the House or Houses of the State Legislature under Article 202 of the Canntitution;
b) “curvent year” means the financial year preteding the ensuing Year c} “ensuing year” tneans the financial year for which the budget is beitl ¢ presented:
dj) “financial year” means the year beginning or the 1s April and endiig on 3158t March next following;
¢) GSDP means Gross State Domestic Product at current merket Price s.
f) “fiscal deficit” is the excess of ageregate dislursements (net ef Geb: repayments) over revenue receipts, recovery of loans and non-debt cavital receipts:
2) “fiscal indicators” are such indicators as mai be preseribed foevaluation of the fiscal position of the State Gc vernment;
2 h i i) kk ) “fisce] targets” are the numerical ceilings and proporcions to total revenue receipts (TRR) or GSDP for the fiscal indica-ors;
“prescribed” means prescribed by the rules mmade under this Act:
“previous year” means the year preceding the current year ) “revenue deficit? means the difference between “evenue:
expenditure and total revenue receipts (TRR ;
Explanation:
(1)'Totel revenue receipts’ (TRR) includes State’s own vevenu:
receipts (both tax and non-tax) and curreat transfers from the Center (compriging grants and State’s sheie of Central taxes),
(2)"Touil liabilities” means the liabilities uncer the Consolidated Furd of the State and the Public Account of the State arid shall alsc include borrowings by the public sector undertakings ancl the special purpose vehicles and other eq tivalent instruments including guarantees where the principal and/ or interest are to be serviced out of the State budgets.
FISCAL MANAGEMENT OBJECTIVES The State Government shall:
a) take appropriate measures to remain revenue positive and buile up acequate revenue surplus and contain ‘he fiscal deficit at = sustainable level, and utilize such surplus for discharging the liabilities in excess of the assets or or funding capita exper diture:
9) pursue policies to raise non-tax revenue with due regard to cosi recovery and equity; and lay dawn norms for prioritization of capital expenditure, ar.c pursue expenditure policies that would nrovide impetus fox ecancmic growth, poverty reduction and irnprovement inhumar welfare, FISCAL VANAGEMENT PRINCIPLES “he Stace Government shall be guided by the following, fises!
manaperient principles, namely:
aj transparency in setting the fiscal policy objectives, the implementation of public policy and the publication of fiscal 3
(2) irfarmation so as to enable the public to scrutinize the conduct cl fiseal policy and the state of public finances;
b) stability and predictability in fiscal policy making process and in the way fiscal policy impacts the economy;
c) responsibility in the management of public finances, including integrity in budget formulation;
d) fairness to ensure that policy decisisns of the Stete Government have due regard to their financial tmplications on future generations; and e} efficiency in the design and implementation of the fiscal solicy and in managing the assets and liabilities of the public sector bilance sheet, FISCAL POLICY STATEMENTS TO BE LilID BEFORE TEE LEGISLATURE The State Government shall in each financial year lay before the House /Houses of the Legislature, the following statements of fiscal policy along with the budget, namely:- a] the Macroeconomic Framework Statement;
b}) the Medium Term Fiscal Policy Statement; < nd c) the Fiscal Policy Strategy Statement.
MACROECONOMIC FRAMEWORK STATEMENT The Microeconomic Framework Statement, in such form as may be prescribed, shall contain an overview of the State economy, zn analyss of growth and sectoral composinen of GSDP. en assess nent related to State Government finances and future prospects, Mediu n Term Fiscal Policy Statement The Medium Term Fiscal Policy Statement shal set forth in such form a3 may be prescribed the fiscal management objectives of the State Civernment and three-year roiling targets for the prescribed fiscal indicators with clear erunciation cf the underlying ASSLUTL ONS.
In particular and without prejudice to the provisions contained in sub section {1}, tae medium Term Fiscal Policy Statement shell include the various assumptions behind the fiscrl indicators and an agsessinent of sustainability relating to:- 4
(1) i) ii) iil) the balance between revenue reccipts and revenue expenditure;
the use of capital receipts including borrowings for zenerating productive assets, he estimated yearly pension liabilities worked out on ictuarial basis for the next ten years.
Proviced that in case it is not possible to ca’culate the pension liabilities on actuarial basis during the period of first three yeacs after the coming into force of this Act, the Stat: Government may, during that period, estimate the pension liabilities by making forecasts on the bais of trend growth rates.
FISCA.” POLICY STRATEGY STATEMENT The Fincal Policy Strategy Statement shall be ir such form as muy be prescribed and shall contain, inter alia, i) i) iv] he fiseal policies of the State Government for the ensuirg vear relating to taxation, expenditure, borrowings and other liabilities {including borrowings by, Public Sector Undertakings and Special Purpose Vehicle and other equivalent instruments where liability for repayment is an the state Government), lending, investment:, other contingent abilities, user charges on public goods/utilities and cescription of other activities, such as guarantees and ectivilies of Public Sector Undertakings which have potential budgetary: implications;
the strategic priorities of the State Goverament in the fiscal erea for the ensuing year;
the key fiscal measures and the rationale for any rajar ceviation in fiscal measures pertaining te taxation, sutsidy, ¢xpenditure, borrowings and user charges on public ecods/utilities; and #n evaluation of the current policies of the State Government vis-a-vis the fiscal management principles set out in Section “, the fiscal objectives set out in the Medium-Term Fiscal Policy Statement in sub-section 1 of section 7 and fiscal targets sel ot in section 9, FISCAL TRAGETS The State Government may prescribe such targets as may be deemed necessary for giving effect to the fiscal management!
objectives.
(2)
(2) In paricular, and without prejudice to the generality of the foregoing provisions, the State Government shall i) strive to remain revenue surplus by maxing a balance i1 revenue receipts and expenditure and build up further slrplus.
ii) strive to bring dewn fiscal deficit to 3% ly the year ending March 2010.
iii) ersure within a period of 5 years, beginn ng from the initial financial year on the 1% day of April 2005, and ending ori the 3st day of March 2010, that the total debt stock do net exceed 40 per cent ofthe estirnated GSDP for that year;
iv) limit the amount of annual incremental msk weighted guarantees to i% of the GSDP of that year Provide] that revenue surplus and fiscal defic.t may exceed the limits specified under this section due to ground or grouncis cf unforessen demands on the finances of the State Government arising out of internal disturbance or natural cal: mity or such other exceptional grounds as the State Government may specify, Provide] however that a statement in respect of the ground or ground; specified in the first proviso shall be placed before the House or Houses of the Legislature, as soon as nay be, after such deficit ¢ mount exceeds the aforesaid targets.
MEASURES FOR FISCAL TRANSPARENCY The State Government shall take suitable measures to ensur® greater transparency in its fiscal operations in the public interest and miimize as far as practicable, secrecy in the preparation of the budget.
In particular, and without prejudice to the generality of the foregoirg provisions, the State Government shill, at the time cf presentation of the budget, make disclosures on ‘he following, alonz with de-ailed information in such forms as may 02 prescribed, i) the significant changes in the accounting standards, poheies ard practices affecting or likcly to affect the computaticn cf fiscal indicators;
ii} details of borrowings by way of Ways and Means Acwances/ Overdraft availed of from the Reserve Bank of Ircia- 6
(3) ii.
(1)
(3) Whenever the State Government undertakes to 1 neonditionally and substantially repay the principal amount and /or pay the interest cf any seoarate legal entity, it has to reflect such liability as the borrowings of the State.
MEASURES TO ENFORCE COMPLIANCE The Mi ister-in-Charge of the Department of F nance (hereinafter referrec to as Minister of Finance} shall review, every quarter, the trends in receipts and expenditure in relation to the budget estimat?s and placM¢before the House or Houses of the Legislature, the outzome of such reviews in the next session. The review shal also cotitain staterment on deviation in targets, if sury.
Whenever there is either shortfall in revenue or excess cf expenciture over the intra-year targets menticned in the Fiscal Policy Strategy Statement or the rules made under this Act, the State Government shall take appropriate measures for increasin revenue and /or for reducing the experditure, including curtailnient of the sums authorized to be paid and applied from out of the Consolidated Fund of the State.
Provide: that nothing in this sub-section sliall apply to the expencilure charged on the Consolidated Fund 3f the State undeclause (3) of Article 202 of the Constitution or any othe:
expenditure, which is required to be incurred under any agreement or contract, which cannot be postponed or curtailsd, Any measure proposed in the course of the financial year, waich may lead to an increase in revenue deficit, eithe: through increased!
expenditure or loss of revenue, shall be accompanied by a statement of remedial measures, proposed te neutralize such increase or loss and such statement shall be placed before the House, Jouses of Legislature while seeking aporoval for Revisec!
Estimat..
{4) i2.
(1)
(2)
1a.
14.
The State Government may, if desires so, set up an agency indeperdent of the State Government to review the cornpliance cf the provisions of this Act and table such reviews in the House or Houses of the State Legislature.
POWES TO MAKE RULES The State Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.
In particular, and without prejudice to the generality of the foregoing power, such rulé§S may provide for all or any of the following matters, namely a) the ‘orm of the Macroeconomic Framework Statement utider section 6;
6) the form of Medium-Term Fiscal Policy Statement, including the targets for the fiscal indicators, under section 7;
é) the form of Fiscal Policy Strategy Statement under section 8;
dj} the forms for disciosure under sub-section (2) of section 10;
e) measures to enforce compliance;
) the mianner of review of compliance of the previsions of this Act by the independent agency under section 11; and 2) amy other matter which is required to be, or may be, prescribed.
RULES TO BE LAID BEFORE LEGISLATURE very rile made wader this Act shall be laid, as soon as mat be after it is made, before the House or Houses of the legislature, while it is in session, for a total period of thirty deys which may be comprised in one sessian or in two or more successive sessions, and if, sefore the expiry of the session immedi:tely following the session or the successive sessions aforesaid, the House/ Houses agree in making any modification in the rule or (he House/Houses agree that the rule should not be made, the rvle shall thereafter have effect only in such modified farm or be of no effect, as the ::ase:
maybe; so, however, that any such modification cr annulment shall be without prejudice to the validity of anything previously clone under that male.
PROTECTION OF ACTION TAKEN IN GOOD FAITH No suit, prosecution or other legal proceedings sliall lie against the State Government or any officer of the State Government fer g is.
16.
(1)
(2) anyth ng which is in good faith done or intended to be done under this till or the rules made there under.
APPLICATION OF OTHER LAWS NOT BARRED The crovisions of this bill shall be in addition to, and not in deroge.tion of, the provisions of any other law for the time being in force.
POWER TO REMOVE DIFFICULTIES if any difficulty arises in giving effect to the provisions of chis bill, the Sate Government may, by order publisned in the Official Gazettes, make such provisions not inconsistent with the provisions of this bill as may appear to be necessar. for removing the diffieu ty. &
Provided that no order shall be made under this section after the expiry of two years from the commencement of t1is bill.
Every order made under this section shall be lid, as soon as may be after itis made, before each House of the Stave Legislature.
S.C. Das:
Secret ury Govt. of Tripura.