1. Short title, extent and commencement.—
(1) This Act may be called the Fiscal Responsibility and Budget Management Act, 2003.
(2) It extends to the whole of India.
(3) It shall come into force on such date
2 as the Central Government may, by
notification in the Official Gazette, appoint in this behalf.
2. Definitions.—In this Act, unless the context otherwise requires,—
(a) “fiscal deficit” means the excess of total disbursements, from the Consolidated
Fund of India, excluding repayment of debt, over total receipts into the Fund
(excluding the debt receipts), during a financial year;
3
[(aa) “Central Government debt” at any date means-
(i) the total outstanding liabilities of the Central Government on the security of
the Consolidated Fund of India, including external debt valued at current
exchange rates;
(ii) the total outstanding liabilities in the public account of India; and
1
The words “achieving sufficient revenue surplus and” omitted by sec. 210 of Act 13 of 2018 (w.e.f. 29.03.2018)
2 5th July, 2004, vide notification No. G.S.R. 395(E), dated 2nd July, 2004, see Gazette of India, Extraordinary, Part II
3
Subs. by s. 211 of Act 13 of 2018 (w.e.f. 29.03.2018)
2
(iii) such financial liabilities of any body corporate or other entity owned or
controlled by the Central Government, which the Government is to repay or
service from the annual financial statement, reduced by the cash balance
available at the end of that date;]
(b) “fiscal indicators” means the measures such as numerical ceilings and
proportions to gross domestic product, as may be prescribed, for evaluation of
the fiscal position of the Central Government;
4
[(bb) “general Government debt” means the sum total of the debt of the Central
Government and the State Governments, excluding inter-Governmental liabilities;
(bc) “gross domestic product” means the sum of the gross value added by all
resident production units plus that part of taxes, less subsidies, on products,
which is not included in the valuation of output, during a financial year,
reckoned at current market prices, as published by the Central Statistics
Office from time to time;]
(c) “prescribed” means prescribed by rules made under this Act;
5
[(ca) “real gross domestic product” means gross domestic product, reckoned at
constant prices, as published by the Central Statistics Office from time to time;
(cb) “real output growth” means growth in real gross domestic product;]
(d) “Reserve Bank” means the Reserve Bank of India constituted under subsection (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);
6
[(e) Omitted
(f) Omitted]
3. Fiscal policy statements to be laid before Parliament.—
(1) The Central Government shall lay in each financial year before both Houses of
Parliament the following statements of fiscal policy along with the annual
financial statement and 7
[demands for grants except the Medium-term
Expenditure Framework Statement], namely:—
(a) the Medium-term Fiscal Policy Statement;
(b) the Fiscal Policy Strategy Statement;
(c) the Macro-economic Framework Statement;
8
[(d) the Medium-term Expenditure Framework Statement.]
9
[(1A) The statements referred to in clauses (a) to (c) of sub-section (1) shall be
4
Subs. by sec. 211 of Act 13 of 2018 (w.e.f. 29.03.2018)
5
Ins. by s. 211, ibid (w.e.f. 29.3.2018)
6
Clauses (e) and (f) omitted by s. 211, ibid (w.e.f. 29.03.2018)
7 Subs. by s. 147, Act 23 of 2012, for “demand for grants” (w.e.f. 28.05.2012).
8
Ins. by s. 147, ibid (w.e.f. 28.05.2012)
9
Ins. by s. 147, ibid (w.e.f. 28.05.2012)
3
followed up with the Medium-term Expenditure Framework Statement with
detailed analysis of underlying assumptions.
(1B) The Central Government shall lay the Medium-term Expenditure Framework
Statement referred to in clause (d) of sub-section (1) before both Houses of
Parliament, immediately following the session of Parliament in which the policy
statements referred to in clauses (a) to (c) were laid under sub-section (1).]
(2) The Medium-term Fiscal Policy Statement shall set forth a three-year rolling
target for 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 Policy Statement shall include an assessment of sustainability
relating to—
10[(i) Omitted]
(ii) the use of capital receipts including market borrowings for generating
productive assets.
(4) The Fiscal Policy Strategy Statement shall, inter alia, contain—
(a) the policies of the Central Government for the ensuing financial year relating
to taxation, expenditure, market borrowings and other liabilities, lending
and investments, pricing of administered goods and services, securities
and description of other activities such as underwriting and guarantees
which have potential budgetary implications;
(b) the strategic priorities of the Central Government for the ensuing financial
year in the fiscal area;
(c) the key fiscal measures and rationale for any major deviation in fiscal
measures pertaining to taxation, subsidy, expenditure, administered pricing
and borrowings;
(d) an evaluation as to how the current policies of the Central Government are
in conformity with the fiscal management principles set out in section 4 and
the objectives set out in the Medium-term Fiscal Policy Statement.
(5) The Macro-economic Framework Statement shall contain an assessment of the
growth prospects of the economy with specification of underlying assumptions.
(6) In particular and without prejudice to the generality of the foregoing provisions the
Macro-economic Framework Statement shall contain an assessment relating to—
10 Item (i) omitted by s. 212 of Act 13 of 2018 (w.e.f. 29.03.2018)
4
(a) the growth in the gross domestic product;
(b) the fiscal balance of the Union Government as reflected in the
11[omitted]
gross fiscal balance;
(c) the external sector balance of the economy as reflected in the current
account balance of the balance of payments.
12[(6A) (a) The Medium-term Expenditure Framework Statement shall set forth a
three-year rolling target for prescribed expenditure indicators with
specification of underlying assumptions and risk involved.
(b) In particular and without prejudice to the provisions contained in clause (a),
the Medium-term Expenditure Framework Statement shall, inter alia,
contain—
(i) the expenditure commitment of major policy changes involving
new service, new instruments of service, new schemes and
programmes;
(ii) the explicit contingent liabilities, which are in the form of stipulated
annuity payments over a multi-year time-frame;
13[(iii) Omitted]
(7) The Medium-term Fiscal Policy Statement,
14[the Fiscal Policy Strategy Statement,
the Medium- term Expenditure Framework Statement] and the Macro-economic
Framework Statement referred to in sub-section (1) shall be in such form as
may be prescribed.
4. Fiscal management principles.—
15[(1) the Central Government shall,-
(a) take appropriate measures to limit the fiscal deficit upto three per cent. of
gross domestic product by the 31st March, 2021;
(b) endeavor to ensure that-
(i) the general Government debt does not exceed sixty per cent.;
(ii) the Central Government debt does not exceed forty per cent.,
of gross domestic product by the end of financial year 2024-2025;
(c) not give additional guarantees with respect to any loan on security of the
11 The words “revenue balance and” omitted by Section 212, ibid (w.e.f. 29.03.2018)
12 Ins. by Act 23 of 2012, s. 147 (w.e.f. 28.05.2012)
13 Item (iii) omitted by s. 212 of Act 13 of 2018 (w.e.f. 29.3.2018)
14 Subs. by Act 23 of 2012, s. 147, for “the Fiscal Policy Strategy Statement” (w.e.f. 28.05.2012)
15 Subs. by s. 213 of Act 13 of 2018 (w.e.f. 29.03.2018)
5
Consolidated Fund of India in excess of one-half per cent of gross domestic
product, in any financial year,
(d) endeavor to ensure that the fiscal targets specified in clauses (a) and (b)
are not exceeded after stipulated target dates.
(2) the Central Government shall prescribe the annual targets for reduction of fiscal
deficit for the period beginning from the date of commencement of Part XV of
Chapter VIII of the Finance Act, 2018 and ending on the 31st March, 2021:
Provided that exceeding annual fiscal deficit target due to ground or grounds of
national security, act of war, national calamity, collapse of agriculture severely
affecting farm output and incomes, structural reforms in the economy with
unanticipated fiscal implications, decline in real output growth of a quarter by at
least three per cent points below its average of the previous four quarters, may
be allowed for the purposes of this section.
(3) Any deviation from fiscal deficit target under sub-section (2) shall not exceed
one-half per cent. of the gross domestic product in a year.
(4) The Central Government shall, in case of increase in real output growth of a
quarter by at least three per cent points above its average of the previous four
quarters, reduce the fiscal deficit by at least one-quarter per cent of the gross
domestic product in a year.
(5) Where the fiscal deficit is allowed to vary from the target prescribed under the
proviso to sub-section (2) or deviation is initiated under sub-section (4), a
statement explaining the reasons thereof and the path of return to annual
prescribed targets under this section shall be laid, as soon as may be, before
both the Houses of Parliament.]
5. Borrowing from Reserve Bank.—
(1) The Central Government shall not borrow from the Reserve Bank.
(2) Notwithstanding anything contained in sub-section (1), the Central Government
may borrow from the Reserve Bank by way of advances to meet temporary
excess of cash disbursement over cash receipts during any financial year in
accordance with the agreements which may be entered into by that Government
with the Reserve Bank:
Provided that any advances made by the Reserve Bank to meet temporary
excess cash disbursement over cash receipts in any financial year shall be
repayable in accordance with the provisions contained in sub-section (5) of
section 17 of the Reserve Bank of India Act, 1934 (2 of 1934).
16[(3) Notwithstanding anything contained in sub-section (1), the Reserve Bank
16 Subs. by s. 214 of Act 13 of 2018 (w.e.f. 29.03.2018)
6
may subscribe to the primary issues of Central Government Securities due
to ground or grounds specified in the proviso to sub-section (2) of section 4.]
(4) Notwithstanding anything contained in sub-section (1), the Reserve Bank may
buy and sell the Central Government securities in the secondary market 17[or
converts Central Government Securities held by it with other Securities of
the Central Government as mutually agreed between the Reserve Bank and
the Central Government].
6. Measures for fiscal transparency.—
(1) The Central Government shall take suitable measures to ensure greater
transparency in its fiscal operations in public interest and minimise as far as
practicable, secrecy in the preparation of the annual financial statement and
demands for grants.
(2) In particular, and without prejudice to the generality of the foregoing provision,
the Central Government shall, at the time of presentation of annual financial
statement and demands for grants, make such disclosures and in such form
as may be prescribed.
7. Measures to enforce compliance.—
(1) The Minister-in-charge of the Ministry of Finance shall review, 18[on half-yearly
basis], the trends in receipts and expenditure in relation to the budget and
place before both Houses of Parliament the outcome of such reviews.
19[(1A) The Central Government shall prepare a monthly statement of its accounts.;]
(2) Whenever there is either shortfall in revenue or excess of expenditure over the
20[prescribed levels] during any period in a financial year, the Central
Government shall take appropriate measures for increasing revenue or for
reducing the expenditure (including curtailing of the sums authorised to be paid
and applied from and out of the Consolidated Fund of India under any Act so as
to provide for the appropriation of such sums):
Provided that nothing in this sub-section shall apply to the expenditure charged
on the Consolidated Fund of India under clause (3) of article 112 of the
Constitution or to any other expenditure which is required to be incurred under
any agreement or contract or such other expenditure which cannot be postponed
or curtailed.
17 Ins. by s. 214 of Act 13 of 2018 (w.e.f. 29.03.2018)
18 The words “every quarter” subs. by s. 215, ibid (w.e.f. 29.03.2018)
19 Ins. by s. 215, ibid (w.e.f. 29.03.2018)
20 The words “ pre-specified levels mentioned in the Fiscal Policy Strategy Statement and the rules made under this Act”
subs. by s. 215, ibid (w.e.f. 29.03.2018)
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(3) (a) Except as provided under this Act, no deviation in meeting the obligations
cast on the Central Government under this Act, shall be permissible without
approval of Parliament.
(b) Where, owing to unforeseen circumstances, any deviation is made in
meeting the obligations cast on the Central Government under this Act, the
Minister-in-charge of the Ministry of Finance shall make a statement in both
Houses of Parliament explaining—
(i) any deviation in meeting the obligations cast on the Central Government
underthis Act;
(ii) whether such deviation is substantial and relates to the actual or the
potential budgetary outcomes; and
(iii) the remedial measures the Central Government proposes to take.
21 [7A. Laying of review reports.—The Central Government may entrust the Comptroller
and Auditor-General of India to review periodically as required, the compliance of the
provisions of this Act and such reviews shall be laid on the table of both Houses of Parliament.]
8. Power to make rules.—
(1) The Central 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 power, such
rules may provide for all or any of the following matters, namely:—
(a) the annual targets to be specified under sub-section (2) of section 4;
(b) the fiscal indicators to be prescribed for the purpose of sub-section (2) of
section 3;
22[(ba) the expenditure indicators with specifications of underlying assumptions
and risk involved under clause (a) of sub-section (6A) of section 3;]
(c) the forms of the Medium-term Fiscal Policy Statement,
23[Fiscal Policy
Strategy Statement, Medium-term Expenditure Framework Statement] and
Macro-economic Frame Work Statement referred to in sub-section (7) of
section 3;
24[(ca)Omitted]
(d) the disclosures and form in which such disclosures shall be made
under sub-section (2) of section 6;
25[(da)the level of shortfall in revenue or excess of expenditure under sub-section
(2) of section 7;]
21 Ins. by Act 23 of 2012, s. 149 (w.e.f. 28.05.2012)
22 Ins. by s. 150, ibid. (w.e.f. 28.05.2012)
23 Subs. by s. 150, ibid., for “Fiscal Policy Strategy Statement” (w.e.f. 28.05.2012)
24 Clause (ca) omitted by s. 216, Act 13 of 2018 (w.e.f. 29.03.2018)
25 Ins. by s. 216, ibid (w.e.f. 29.03.2018)
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(e) any other matter which is required to be, or may be, prescribed.
9. Rules to be laid before each House of Parliament.—Every rule made under this Act shall
be laid, as soon as may be after it is made, before each House of Parliament, while it is in
session, for a total period of thirty days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any
modification in the rule or both Houses agree that the rule should not be made, the rule shall
thereafter have effect only in such modified form or be of no effect, as the case may be; so,
however, that any such modification or annulment shall be without prejudice to the validity of
anything previously done under that rule.
10. Protection of action taken in good faith.—No suit, prosecution or other legal
proceedings shall lie against the Central Government or any officer of the Central
Government for anything which is in good faith done or intended to be done under this Act or
the rules made thereunder.
11. Jurisdiction of civil courts barred.—No civil court shall have jurisdiction to question
the legality of any action taken by, or any decision of, the Central Government, under this Act.
12. Application of other laws not barred.—The provisions of this Act shall be in addition to,
and not in derogation of, the provisions of any other law for the time being in force.
13. Power to remove difficulties.—
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central
Government may, by order published in the Official Gazette, make such
provisions not inconsistent with the provisions of this Act as may appear to
be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of two
years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is
made, before each House of Parliament.