Fiscal Responsibility and Budget Management Act, 2003
[39 OF 2003]1
An Act to provide for the responsibility of the Central Government to ensure intergenerational equity in fiscal management and long-term macro-economic stability by 2[***] removing fiscal impediments in the effective conduct of monetary policy and prudential debt management consistent with fiscal sustainability through limits on the Central Government borrowings, debt and deficits, greater transparency in fiscal operations of the Central Government and conducting fiscal policy in a medium-term framework and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Fifty-fourth Year of the Republic of India as follows:—
Short title, extent and commencement.
1. (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 date3 as the Central Government may, by notification in the Official Gazette, appoint in this behalf. Definitions.
2. 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;
4[(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;
1.Dated 26-8-2003.
2. The words “achieving sufficient revenue surplus and” omitted the Finance Act, 2018, w.e.f. 31-3-2018.
3.Enforced with effect 5-7-2004, vide G.S.R. 395(E), 2-7-2004.
4.Substituted by the Finance Act, 2018, w.e.f. 31-3-2018. Prior to substitution, clause (aa) as inserted by the Finance Act, 2012, w.e.f. 28-5-2012, read as under:
‘(aa) “effective revenue deficit” means the difference between the revenue deficit and grants for creation of capital assets;’.
S. 2
FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2003 2
(ii) the total outstanding liabilities in the public account of India; and (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 products, as may be prescribed, for evaluation of the fiscal position of the Central Government;
5[(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;
6[(ca) “real gross domestic product” means gross domestic product, reckoned at constant prices, as published by the Central Statistic 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 sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);
(e) & (f) 7[***]
SECTION NOTES
COMMENTS
2.1 Definition of “Fiscal Deficit” [Section 2(a)] “Fiscal deficit” means the excess of total disbursements over total receipts into the Fund.
5. Substituted by the Finance Act, 2018, w.e.f. 31-3-2018. Prior to substitution, clause (bb) as inserted by the Finance Act, 2012, w.e.f. 28-5-2012, read as under:
‘(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;’.
6. Inserted, ibid
7. Omitted, ibid
Prior to their omission, cluases (e) and (f), read as under:
‘(e) “revenue deficit” means the difference between revenue expenditure and revenue receipts which indicates increase in liabilities of the Central Government without corresponding increase in assets of that Government;
(f) “total liabilities” means the liabilities under the Consolidated Fund of India and the public account of India.’.
These total disbursements are from the Consolidated Fund of India.
For the purpose of determining fiscal deficit, repayment of debt is excluded from total disbursements.
For the purpose of determining fiscal deficit, debt receipts are excluded from total receipts into the Fund.
This excess is measured during a financial year.
2.2 Definition of “Central Government Debt” [Section 2(aa)]
“Central Government debt” at any date means the total of the liabilities specified below, reduced by the cash balance available at the end of that date.
2.2-1 Liabilities on Security of Consolidated Fund
Central Government Debt includes:
The total outstanding liabilities of the Central Government on the security of the Consolidated Fund of India, and External debt.
External debt included in Central Government Debt must be valued at current exchange rates.
2.2-2 Public Account Liabilities
Central Government Debt is the total outstanding liabilities in the public account of India.
2.2-3 Liabilities of Controlled Entities Repayable from Annual Financial Statement
Central Government Debt includes such financial liabilities of any body corporate or other entity owned or controlled by the Central Government.
These included financial liabilities are those which the Government is to repay or service from the annual financial statement.
2.3 Definition of “Gross Domestic Product” [Section 2(bc)]
“Gross domestic product” means the sum of the gross value added by all resident production units.
This sum is increased by that part of taxes, less subsidies, on products.
The specific part of taxes, less subsidies, on products included is that which is not included in the valuation of output.
This sum is calculated during a financial year.
The calculation is reckoned at current market prices.
The result is as published by the Central Statistics Office from time to time.
Fiscal Policy statements to be laid before Parliament.
3. (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 8[demands for grants, except the Medium-term Expenditure Framework Statement], namely:—
(a) the Medium-term Fiscal Policy Statement;
8. Substituted for “demands for grants” by the Finance Act, 2012, w.e.f. 28-5-2012. 3
