CHAPTER VI
AMENDMENTS TO THE FISCAL RESPONSIBILITY AND
BUDGET MANAGEMENT ACT, 2003.
Amendment of section 2.
146. In section 2 of the Fiscal Responsibility and Budget Management Act, 2003 (39 of 2003). (hereinafter referred to as the Fiscal Responsibility Act),—
(i) after clause (a), the following clause shall be inserted, namely:—
'(aa) "effective revenue deficit" means the difference between the revenue deficit and grants for creation of capital assets;';
(ii) after clause (b), the following clause shall be inserted, namely:—
'(bb) "grants for creation of capital assets" means the grants in aid given by the Central Government to the State Governments, constitutional authorities or bodies, autonomous bodies, local bodies and other scheme implementing agencies for creation of capital assets which are owned by the said entities;'.
Notes on Clauses:
Chapter VI (containing clauses 146-150) provides for amendments in the Fiscal Responsibility and Budget Management Act, 2003. Clause 146 seeks to amend section 2 of the aforesaid Act so as to insert the new clauses (aa) and (bb) defining the expressions of “effective revenue deficit” and “grants for creation of capital assets”. Clause 147 seeks to amend section 3 of the aforesaid Act relating to fiscal policy statements to be laid before Parliament. It is proposed to amend sub-section (1) of the said section so as to insert a new clause (d) relating to the Medium-term Expenditure Framework Statement which is also a statement of fiscal policy in addition to the statements of the fiscal policy specified therein. It further seeks to insert new sub-sections (1A) and (1B) in the aforesaid section so as to provide that the statements referred to in clauses (a) to (c) of sub-section (1) shall be followed up with the Medium-term Expenditure Framework Statement with detailed analysis of underlying assumptions. The proposed new sub-section (1B) provides that 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). It also seeks to insert a new sub-section (6A) in the aforesaid section so as to provide that
(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) the Medium-term Expenditure Framework Statement shall, inter alia, contain the expenditure commitment of major policy changes involving new service, new instruments of service, new schemes and programmes; the explicit contingent liabilities, which are in the form of stipulated annuity payments over a multi-year time-frame; and the detailed breakup of grants for creation of capital assets. It also seeks to amend sub-section (7) of the aforesaid section so as to include the “Medium-term Expenditure Framework Statement” in the said sub-section for the purpose of prescribing the form with respect to the said Statement.
