The Assam Fiscal Responsibility and Budget Management (Amendment) Act, 2005
#### Registered No. - 768/97

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# THE ASSAM GAZETTE

### EXTRAORDINARY

#### SIT'S ’^ T SHCHo

 PUBLISHED BY AUTHORITY

##### -R 188 1^*1^, W W 17 CT’ , 2005, 27 W T 1927 (*Rs.)

 No. 188 Dispur, Tuesday, 17th May, 2005, 27th Vaisakha, 1927 (S.E.)

 GOVERNMENT OF ASSAM

 ORDERS BY THE GOVERNOR

 LEGISLATIVE DEPARTMENT : : LEGISLATIVE BRANCH

#### NOTIFICATION

##### The 17th May, 2005

#### No. LGL.59/2005/13.— The following Act of the Assam Legislative

##### Assembly which received the assent of the Governor is hereby published for

 general information.


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1506 T H E A SSA M G A Z E T T E , EX TR A O R D IN A R Y , M A Y 17, 2005

A SSA M A C T NO . X X V II OF 2005

(R eceived the assent o f the G overnor on 13th May, 2005

**THE ASSAM FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT. 2005**

**AN**

**ACT**

to provide for the responsibility of the State Government to ensure fiscal stability, sustainability,
improve efficiency and transparency in management of the public finances of the State, enhance
the availability of resources by achieving sufficient revenue surplus, reduce fiscal deficit and
remove the impediments to effective conduct of fiscal policy and prudent debt management for
improving the social and physical infrastructure and human development in the State.

Be it enacted by Assam legislative Assembly in the Fifty sixth Year of the Republic of India as

follows

**1. Short title, extent and commencement.-**

(1) This Act may be called The Assam Fiscal Responsibility and Budget Management

Act, 2005.

(2) It extends to the whole of Assam.
(3) It shall come into force on such date as the State Government may, by notification in

the Official Gazette, appoint.

**2. Definitions.- In this Act, unless the context otherwise requires,-**

(a) “Administrative Approval” means authority to create liability and _I or incur_

expenditure;

(b) “Annual budget” means the annual financial statement laid before the State

Legislature under article 202 of the Constitution;

(c) “Appointing Authorities” means officers of the State Government exercising the

delegated authority of appointing persons to the posts under the State Government;

(d) “Current Year” means the year preceeding the year for which the budget and the Five

Year Fiscal Plan (FYFP) are being presented;

(e) “Financial Year” means the year beginning on the 1st April and ending on the 11st day

of March of the following calendar year;

(f) “Fiscal Deficit’ means the excess of aggregate disbursements (net of debt

repayments) from the Consolidated Fund of the State over revenue receipts, recovery
of loans and non-debt capital receipts during a financial year;

**Explanation:** For the purpose of calculation of Fiscal Deficit, boirowings by the Public
Sector Undertakings and Special Purpose Vehicles and other equivalent instruments
where liability for repayment is on the State Government, are to be treated as the
borrowings of the State Government.

                        - A

(g) “Plan Outlay” means the annual aggregate plan for the State for a financial year as

approved by the Planning Commission of the Government of India;


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#### THE ASSAM GAZETTE, EXTRAORDINARY, MAY 1 7, 2005 1507

(h) “Fiscal Indicators” means such figures, proportions, percentages as -nay be

prescribed, for evaluation of the fiscal position of the State Government;

(i) “Prescribed” means as prescribed by the rules made under this Act;
(j) “Previous Year” means the year preceeding the current year;
(k) ‘Revenue deficit’ means the excess of the revenue expenditure over the revenue

receipts in a financial year;

**Explanation:** For the purpose of this clause, interest payment by the State Government
towards the borrowings by the Public Sector Undertakings, Special Purpose Vehicles or
any other equivalent instruments where the liability for repayment is on the Government,
shall be treated as revenue expenditure.

(l) “Revenue Surplus” means the excess of revenue receipts over the revenue

expenditure;

(m) “Sanctioned Post” means the posts which were created by a sanction of,the State

Government and has not been subsequently abolished or kept in abeyance by an order
of the State Government;

(n) “State Government” means the Government of Assam;
(o) “Finance Department” means the Finance Department of the Government of Assam;
(p) “Total Liabilities” means liabilities upon the Consolidated Fund of the State and

Public Account of the State.

**3. The Five Year Fiscal Plan to be laid before the Legislature. -** (1) The State Government

shall in each financial year, lay before the State Legislature a Five Year Fiscal Plan
along with the Annual Budget.

(2) The Five Year Fiscal Plan shall set forth a five year rolling target for the prescribed

fiscal indicators with specifications of underlying assumptions.

(3) In particular and without prejudice to the provisions contained in sub-section (2), the

Five Year Fiscal Plan shall include an assessment of sustainability relating to,-

(i) balance of revenue receipt and revenue expenditure,
(ii) the use of capital receipts including borrowings for creating productive assets.

(4) The Five year Fiscal Plan shall, inter alia, contain, -

(a) the Medium Term Fiscal Objectives of the State Government;
(b) an evaluation of the fiscal indicators in the previous year vis-a-vis the target

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 the fiscal position of the State Go vernment;

(d) the strategic priorities of the State Government in the fiscal area for the

ensuing financial year;

(e) policies of the State Government for the ensuing Financial year relating to tax

and non-tax revenue, expenditure, subsidies (including grants to Public Sector


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#### 1508 THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 2005

Undertakings, grants-in-aid to Non- Government Organizations), borrowing
and other liabilities, lending and investments, Government guarantees to
Public Sector Undertakings with key fiscal measures ar.d targets relating 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 Five Year Fiscal Plan.

(5) The Five Year Fiscal Plan shall be in such form as may be prescribed.

**4. Fiscal Management Principles. -** (1) The State Government will, be guided by following

fiscal management principles:-

(a) manage expenditures consistent with the revenue generated;
(b) maintain Government debt at prudent level;
(c) manage guarantees and other contingent liabilities prudently with particular reference

to the quality and level of such liabilities;

(d) ensure that the policy decisions of the Government have due regard to the financial

implications on the future generations;

(e) ensure that the borrowings are used for productive assets and accumulation of capital

assets and are not applied to finance revenue expenditures;

(f) ensure a reasonable degree of stability and predictability in the level of tax burden;
(g) maintain the integrity of the tax system by minimizing special incentives, concessions

and exemptions;

(h) pursue tax policies with due regard to economic efficiency and compliance costs;
(i) pursue non-tax policies with due regard to cost recovery and equity;
(j) pursue expenditure policies that would provide impetus to economic growth, poverty

reduction and improvement in human welfare;

(k) build up a revenue surplus for use in capital formation and productive expenditure;
(l) ensure maintenance of the physical assets of the Government;
(m) maintain transparency by disclosing sufficient information to allow public to

scrutinize the state of the public finances;

(n) ensure best possible uses of the Government resources and public assets;
(o) minimize the fiscal risk associated with management of public sector undertakings

and the utilities providing public goods and services;

(p) ensure discharge of cunent liabilities in a timely manner;
(q) formulate a realistic budget with due regard to the general economic outlook and

revenue prospects and minimize deviations during the course of the year.

(2) The State Government shall take appropriate measures to eliminate revenue deficit

and contain fiscal deficit at a 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,-


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#### THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 2005 1509

(i) eliminate revenue deficit within five financial years beginning on the 1st day
of April 2005 and ending on the 31[s1] day of March 2010;

(ii) reduce the revenue deficit as a percentage of Gross State Domestic Product
(GSDP) in each of the Financial year beginning 1st day of April 2005, in a

manner consistent with the target set out in clause ( i ) above;

**Explanation:** For the purpose of calculation of the revenue deficit vis-a-vis the target set
for any year, due adjustments will be made to cover the shortfall in the current transfers
from the Centre, including devolution of the State’s share of Central taxes, with reference
to the budgetary provision of the year.

(iii) by the year 2010 the expenditure on account of salary and wages of the
employees of the State Government will be contained within 60% of the total
tax and non-tax revenue of the State Government, including devolutions from
the Government of India but excluding the grants under the Annual Plan from
the Planning Commission and other developmental grants;

(iv) restrict the revenue expenditure under Annual state plan to one third of the

Plan outlay in a financial year with a view to making more fund available for
capital and developmental expenditures;

**Explanation: For the purpose of computation of revenue expenditure, any grant given for**
capital expenditure will be excluded but any loan given for revenue expenditure will be
included.

(v) reduce fiscal deficit to 3% of the estimated Gross State Domestic Product within

a period of five financial years beginning on the 1[st] day of April 2005 and
ending on 31st day of March 2010;

(vi) reduce fiscal deficit as percentage of the estimated Gross State Domestic

Product in each of the financial year beginning on 1st day of April 2005, in a

manner consistent with the goal set out in clause (v) above;

(vii) restrict the total debt stock of the State Government including the Government

Guarantee to 45% of the GSDP of the previous year at current prices within a
period of five years beginning on the 1st day of April, 2005;

(viii) State Government Guarantee for the loans contracted by Public Sector

Undertakings, Boards, Companies, Corporations, Cooperative societies or
Autonomous organizations under the State Government, shall be restricted at
any point of time to fifty percent of State’s own tax and non-tax revenue of the
previous year or five percent of the GSDP of previous year at current prices,
whichever is lower:

Provided that revenue deficit and fiscal deficit may exceed the limits specified under this

sub-section on the ground or grounds of unforeseen demands on the finances of the State
Government arising out of internal disturbance or natural calamity or such other exceptional
grounds as the State Government may specify:


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#### 1510 THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 200k

Provided further that the ground or grounds specified in the first proviso shall be placed

before the State Legislature, as soon as may be, after such deficit amount exceeded the aforesaid
limit.

**5. Measures for Fiscal Transparency.-** (1) The State Government snail take measures to

ensure greater transparency in its fiscal operations in public interest.

(2) The State Government shall take measures to simplify the format of the Annual Financial

Statement.

(3) The State Government shall at the time of presentation of the Annual Budget disclose in a

statement in the form as may be prescribed:

(a) the key fiscal indicators including those mentioned in Section 4 (3);
(b) the significant changes in the accounting standards, policies and practices

likely to affect the computation of the fiscal indicators;

(c) as far as practicable and consistent with public interest, the contingent

liabilities of State Government created by way of guarantee, actual liabilities
arising out of borrowings giving the outstanding amounts of principal, interest
and also the outstanding liabilities in respect of works and supplies under each
Department.

(4) The State Government shall codify at one place the existing rules and procedures for issue of

administrative approval, financial sanction, procurement of goods and services, award of
work and contract in government transactions and, if necessary, bring about such
amendments therein, to ensure greater transparency in such transactions.

**6. Measures to enforce compliance.-** (1) The Annual Budget and the policies announced at the

time of presentation of the budget shall be consistent with the objectives and target set in the
Five Year Fiscal Plan.

(2) The Finance Minister shall be responsible for preparation of the Annual Financial Statement

which is to be laid before the State Legislature under Article 202 of the Constitution of India
after due consideration of and consultation, as may be necessary, on the proposals received
for the purpose.

(3) Proposals for Supplementary or Additional demands for grants placed before the State

Legislature shall be accompanied with a statement of their impact on the fiscal indicators as
disclosed at the time of presentation of the Annual Financial Statement under Section 5 (3) of

this Act.

(4) The Department of Finance shall review every year the trends in receipts and expenditure

including the fiscal indicator targets set for the current financial year and place before the
State Legislature a statement containing the outcome of such reviews.

(5) The statement, inter alia, shall contain,-


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##### TE% ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 2005 1511

(a) any deviation in meeting the obligation and target cast on the State

Government;

(b) whether such deviation is substantial or relates to actual or potential

budgetary outcomes and how much of the deviation can be attributed to the
general economic scenario;

(c) gny remedial measures the State Government proposes to take.

**7. Measures to ensure Fiscal Discipline.-** (1) With a view to ensuring timely discharge of

current liabilities, especially payment of salaries to the employees, -

(a) the State Government or the appointing authorities under it shall give

appointments only against a sanctioned post which is vacant and in
accordance with the laid down Rules, procedures and orders;

**Explanation:** The appointing authorities under this clause shall include the appointing
authorities of the autonomous bodies including Public Sector Undertakings, Companies,
Statutory Bodies, Trusts, Societies and Cooperatives Societies under the State
Government.

(b) notwithstanding any other provision contained in any Act or Rules, no new

post shall be created in any department of the State Government or in
Autonomous bodies including Public Sector Undertakings, Companies,
Statutory Bodies, Trusts, Societies and Cooperatives Societies, which are
under the State Government, without the prior concurrence of the Finance
Department;

(c) no appointment shall be made by the State Government or the appointing

authorities under it in the vacancies arising out of transfer and leave of the
incumbents in these posts;

(d) no appointment shall be made by the State Government or the appointing

authorities under it, in a post in anticipation of it’s falling vacant in future;

(e) the State Government or the appointing authorities under it shall not make

more than one appointment against one vacant post;

(f) any letter of appointment to any vacant sanctioned post shall clearly indicate

the identity of the post in the manner as may be prescribed;

(g) notwithstanding any other provision contained in any Act or Rules, the select

list prepared for the fresh appointments to vacant sanctioned posts shall
contain names equal to the number of vacant posts notified at the time of
calling for applications for filling up the posts.

(2) Before awarding any work or starting a construction work or awarding an order of supply

of goods and services which create liability on the Consolidated Fund of the State, the
State Government or the authorities exercising delegated financial powers shall fust issue
administrative approval or financial sanction, for the work or the order of supply as the
case may be, in compliance with the existing Rules, procedures and guidelines and
further Rules, procedures and guidelines that may be prescribed from time to time.


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#### 1512 THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 200.X

(3) Each Department shall maintain a register of works and order of supplies of goods and

services, liabilities incurred against these works and orders of'supplies, liabilities cleared

and liabilities awaiting clearance, in a format as may be prescribed:

Provided that the Government may make Rules not to sanction new work if the

outstanding liabilities in a Department exceed a limit as may be prescribed.

**8. Offences and Penalties.**       - (1) Whoever violates any one or more of the provisions of section

7 shall commit an offence which shall be punishable with rigorous imprisonment for a

term which may extend to three years.
(2) Whoever causes financial loss to the State Government, willfully and with malafide
intention, by under assessment and/or under realization of revenue due to the State
Government and/ or by incurring unauthorized expenditure shall commit an offence
which shall be punishable with rigorous imprisonment for a term which may extend to
three years and/or recovery of the amount of financial loss caused to the State
Government with interest.
(3) A person who abets any of the offences as aforesaid shall be liable for the same
punishment as provided for the offence.
(4) Not withstanding anything contained in Code of Criminal Procedure, 1973 the
offences committed under this Act shall be treated as cognizable offences.

(5) Offences under this Act shall be triable by a Magistrate not lower in rani: than of a

Judicial Magistrate of 1st class.

**9. Power to make rules.- (1) The State Government may, by notification in the Official Gazette**

make rules for carrying out the provisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing provision such rules

may provide for all or any of the following matters, namely: -

(i) The fiscal indicators to be prescribed for the "purpose of sub-section (2) of

section 3 and clause (a) of sijib section (3) of section 5;

(ii) The format of Five Year Fiscal Plan as referred to in sub-section (5) of section

3 and sub section (3 ) of section 5;

(iii) Any other matter which is required to be, or may be, prescribed;

(3) All rules made by the State Government under this Act shall, as soon as may be after they

are made, be laid before the State Legislature, while it is in session for a total period of not
less than fourteen days, which may be comprised in one session or two or more successive
sessions, and shall unless some later date is appointed, take effect from the date of their
publication in the Official Gazette subject to such modifications or annulments as the
Legislature may, during the said period agree to make, so however, that any such
modification or annulment shall without prejudice to the validity of anything previously
done thereunder.


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#### THE ASSAM GAZETTE, EXTRAORDINARY, MAY 17, 2005 1513

**10. Protection of action taken in good faith.**  - No suit, prosecution or other legal proceedings

shall lie against the State Government or any officer of the State Government for anything
which is done or intended to be done in good faith under this Act or Rules made thereunder.

**11. Application of other laws not barred. - The provision of this Act shall be in addition to and**

not in derogation of the provisions of any law for the time being in force.

**12. Power to remove difficulties. - (1) If any difficulty arises in giving effect to the provisions**

of this Act, the State Government may by orders published in the Official Gazette, make such
provisions not inconsistent with the provisions of this Act, as may appear to it to be
necessary or expedient for removing the difficulty:

Provided that no such order shall be made after the expiry of a period of two years

from the date of commencement of this Act

(2) Every order made under this section shallbe laid as soon as may be after it is made before

the State Legislature.

**M OHD. A. HAOUE,**

**Secretary to the Govt, o f Assam,**

**Legislative Departm ent, Dispur.**

GUWAHATI- Printed & Published by the Dy. Director (P&S), Directorate of Ptg. & Sty.,

Assam, Guwahati-21, (Ex-Gazette) No.375-500-600-1000-17-5-2005.


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