Fiscal Responsibility and Budget Management (Amendment) Rules, 2018

EXTRAORDINARY PUBLISHED BY AUTHORITY No. 204] NEW DELHI, MONDAY, APRIL 2, 2018/CHAITRA 12, 1939 MINISTRY OF FINANCE (Department of Economic Affairs) NOTIFICATION New Delhi, the 2nd April , 2018 G.S.R. 321(E).—In exercise of the powers conferred by section 8 of the Fiscal Responsibility and Budget Management Act, 2003 (39 of 2003), the Central Government hereby makes the following rules further to amend the Fiscal Responsibility and Budget Management Rules, 2004, namely:- 1. (1) These rules may be called the Fiscal Responsibility and Budget Management (Amendment) Rules, 2018. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Fiscal Responsibility and Budget Management Rules, 2004, (i) in rule 2, for clause (c), the following clauses shall be substituted, namely:- ‘(c) “primary deficit” means the fiscal deficit minus the interest payments; (ca) “revenue deficit” means the difference between revenue expenditure and revenue receipts;’ (ii) for rule 3, the following rule shall be substituted, namely:- “3. The Central Government shall reduce the fiscal deficit by an amount equivalent to 0.1 per cent or more of the gross domestic product (GDP) at the end of each financial year beginning with the financial year 2018-19, so that fiscal deficit is brought down to not more than 3 per cent of the GDP by 31 st day of March, 2021.”; (iii) for rule 4, the following rule shall be substituted, namely:- “4. Medium-term Fiscal Policy cum Fiscal Policy Strategy Statement, Macro-economic Framework Statement and Medium- term Expenditure Framework Statement.- The Central Government shall lay before each House of Parliament,- (a) The Medium-term Fiscal Policy cum Fiscal Policy Strategy Statement and the Macro-economic Framework Statement along with the annual financial statement and demand for grants in forms F-1 and F-2, respectively, and (b) the Medium-term Expenditure Framework Statement in form F-3.”; (iv) for rule 5, the following rule shall be substituted, namely:- “5. Fiscal Indicators.– In the Medium-term Fiscal Policy cum Fiscal Policy Strategy Statement, three years rolling targets in respect of the following fiscal indicators shall be as given in Form F-1, namely:- (i) fiscal deficit as a percentage of GDP; (ii) revenue deficit as a percentage of GDP; (iii) primary deficit as a percentage of GDP; (iv) tax revenue as a percentage of GDP; (v) non-tax revenue as a percentage of GDP; and (vi) Central Government debt as a percentage of GDP.”; (v) in rule 6, in sub-rule (1), clause (e) shall be omitted; (vi) in rule 7,- (a) for the words “quarterly review”, the words “half yearly review” shall be substituted; (b) for the words “second quarter” at both places where they occur, the words “first half “shall be substituted; (vii) in rule 8, in sub-rule (2), for the words “Medium Term Fiscal Policy Statement, Fiscal Policy Strategy Statement”, the words “Medium-term Fiscal Policy cum Fiscal Policy Strategy Statement “shall be substituted, (viii) for Forms F-1, F-2, F-3 and F-4, the following forms shall be substituted, namely:- “Form F-1 [See rule 4] MEDIUM TERM FISCAL POLICY CUM FISCAL POLICY STRATEGY STATEMENT A. Fiscal Indicators – Rolling Targets Current Year Revised Estimates Ensuing year Target: Budget Estimates Targets for the next two years 1. Fiscal Deficit as percentage of GDP 2. Revenue Deficit as percentage of GDP 3. Primary Deficit as percentage of GDP 4. Tax Revenue as percentage of GDP 5. Non-tax Revenue as percentage of GDP 6. Central Government debt as percentage of GDP B. Assumptions underlying the Fiscal Indicators – 1. Revenue receipts: (a) Tax-Revenue – Sectoral and GDP growth rates (b) Non-tax-revenue – Policy stance (c) Devolution to States – Finance Commission 2. Capital receipts – Debt stock, repayment, fresh loans and policy stance: (a) Recovery of loans (c) Borrowings – Public Debt and Other Liabilities 3. Total expenditure – Policy Stance: (a) Revenue account (i) Interest payments (iii) Others (i) Loans and advances 4. GDP Growth C. Assessment of sustainability relating to - (i) The balance between revenue receipts and revenue expenditure: The statement may specify the tax-GDP ratio for the current year and subsequent two years with an assessment of the changes required for achieving it. It may discuss the non-tax revenues and the policies concerning the same. An assessment of the capital receipts may be made, including the borrowings and other liabilities, as per policies spelt out. The statement may also give projections for GDP and discuss it on the basis of assumptions underlying the indicators. Expenditure on revenue account may also be made with particular emphasis on the measures proposed to meet the overall objectives. (ii) The use of capital receipts including market borrowings for generating productive assets: The statement may specify the proposed use of capital receipts for generating productive assets in different categories. It may also spell out proposed changes among these categories and discuss it in terms of the overall policy of the Government in achieving the national objectives. D. Fiscal Policy Strategy Overview: This paragraph will present an overview of the fiscal policy strategy currently in vogue. E. Fiscal policy strategy for the ensuing financial year: This paragraph shall have the following sub-paragraphs dealing with – (1) Tax Policy: In the sub-paragraph on tax policy, major changes proposed to be introduced in direct and indirect taxes in the ensuing financial year will be presented. It shall contain an assessment of income tax exemption limits and how far it relates to per capita income, principles regarding tax exemptions and target group for exemptions. (2) Expenditure Policy: Under expenditure policy, major changes proposed in the allocation of expenditure shall be indicated. It shall also contain an assessment of principles regarding the benefits and targets group of beneficiaries. (3) Government Borrowings, Lending and Investments: In this sub-paragraph on Government borrowings, the policy relating to internal debt, external debt, Government lending, investments and other activities; including principles average maturity structure, bunching of repayments, etc., shall be indicated. (4) Contingent and other Liabilities: Any change in the policy on contingent liabilities and in particular guarantees which have potential budgetary implications shall be indicated. (5) Pricing of Administered Goods: Any-change proposed in the pricing of administered products, including the progress towards market-based principles shall be spelt out. F. Strategic priorities for ensuing year: (1) Resource mobilization for the ensuing financial year through tax, non-tax and other receipts shall be spelt out. (2) The broad principles underlying the expenditure management during the ensuing year shall be spelt out. (3) Priorities relating to management of public debt proposed during the ensuing year shall be indicated. G. Rationale for Policy changes: (1) The rationale for policy changes consistent with the Medium Term Fiscal Policy Statement, in respect of direct and indirect taxes proposed in the ensuing Budget shall be spelt out. (2) The rationale for major policy changes in respect of budgeted expenditure including expenditure on subsidies shall be indicated. (3) Rationale for changes, if any, proposed in the management of the public debt shall be indicated. (4) The need for changes, if any, proposed in respect of pricing of administered goods shall be spelt out. This paragraph shall contain an evaluation of the changes proposed in the fiscal policy strategy for the ensuing year with reference to reduction fiscal deficit, Central Government debt and other objectives set out in the statement. Form F – 2 [See rule 4] MACRO-ECONOMIC FRAMEWORK STATEMENT 1. Overview of the Economy: This paragraph shall contain a synoptic analysis of trends in growth rates, prices, output, external sector, money and capital markets. Information on key macro-economic indicators will be presented in the format appended. 2. GDP Growth: This paragraph shall contain an analysis of trends in overall GDP growth and its sectoral composition. 3. External Sector: Under this paragraph, trends in exports, imports, foreign exchange reserves, current account balance and balance of payments shall be presented. 4. Money, Banking and Capital Markets: This paragraph shall present and account of the trends in money supply, bank deposits and credit and developments in the capital market. 5. Central Government Finances: Under this paragraph an analysis of trends in revenue collections and expenditure shall be presented. Trends in important fiscal deficit and debt indicators shall also be presented. Trends in Central Government finances shall be presented in the format appended. 6. Prospects: Based on the trends in major sectors presented in the previous sections, an assessment shall be made regarding the growth prospects, along with the underlying assumptions. Economic Performance at a Glance Absolute Value Percentage Changes Previous year Current year Previous year Current year Real Sector 1 GDP (a) at current price (b) At 2011-12 price 2 Index of Industrial Production 3 Wholesale Price Index (point to point) 4 Consumer Price Index 6 Imports at current prices (a) In ` crore (b) In US $ million 7 Exports at current prices (a) In ` crore Use the latest base year (b) In US $ million 8 Trade Balance 9 Foreign Exchange Assets (a) In ` crore (b) In US $ million 10 Current Account Balance Government Finances 1 Revenue Receipts (2+3) 2 Tax Revenue (Net) 3 Non-Tax Revenue 4 Capital receipts (5+6+7) 5 Recovery of loans 6 Other Receipts 7 Borrowing and other liabilities 8 Total Receipts (1+4) 9 Revenue Expenditure -of which: 10 Interest payments 11 Capital Expenditure 12 Total Expenditure (9+11) Fiscal Deficit {12-(1+5+6)} Revenue Deficit (9-1) 15 Primary Deficit (13-10) *data will relate to the period up to which information for the current year is available. To facilitate comparison, data of previous year corresponds to the same period of current year. Accordingly, reporting period may vary for different items. Form F-3 [See rule 4] MEDIUM-TERM EXPENDITURE FRAMEWORK A. MEDIUM-TERM EXPENDITURE PROJECTIONS (Major category wise) (Figures in ` crore) Previous Year’s Revised Estimates Current Year’s Budget Estimates Projections for next two years Revenue Expenditure 1. Salary 2. Interest 3. Pension 4. Subsidies a. Food b. Fertiliser c. Petroleum 5. Centralized provision for Grants to States 6. Defence 7. Postal Deficit 8. External Affairs 9. Home Affairs 10. Tax Administration 11. Finance 12. Education 13. Health 14. Social welfare 15. Agriculture and allied 16. Commerce and Industry 17. Urban Development 18. Rural Development 19. Development of North East 20. Planning and Statistics 21. Scientific Departments 22. Energy 23. Transport 24. IT and Telecom 25. Union Territories 26. Others Total-Revenue Expenditure Previous Year’s Revised Estimates Current Year’s Budget Estimates Projections for next two years Capital Expenditure 1. Defence 2. Home Affairs 3. Finance 4. Health 5. Commerce and Industry 6. Urban Development 7. Planning and Statistics 8. Scientific Departments 9. Energy 10. Transport 11. IT and Telecom 12. Loans to States 13. Union Territories 14. Others Total-Capital Expenditure Total Expenditure B. ASSUMPTIONS UNDERLYING THE MEDIUM TERM EXPENDITURE PROJECTIONS 1. Revenue Expenditure a. Salaries b. Pensions d. Subsidies e. Defence f. Other Revenue Expenditure and the underlying expenditure priorities 2. Capital Expenditure a. Defence b. Road Transport and Highways c. Budgetary support for capital expenditure of Railways d. Other Capital Expenditure and the underlying expenditure priorities. C. MEDIUM-TERM EXPENDITURE PROJECTIONS (Demand wise and on net basis) (Figures in ` crore) Demand No. Demand Name Previous Year’s Revised Estimates Current Year’s Budget Estimates Projections for next two years 1. Demand Name Revenue Capital Total D. MEDIUM-TERM EXPENDITURE PROJECTIONS FOR SELECT SCHEMES (on net basis) 1. Revenue Section: (Figures in ` crore) Demand Scheme Name Previous Year’s Revised Estimates Current Year’s Budget Estimates Projections for next two years 2. Capital Section: (Figures in ` crore) Demand Scheme Name Previous Year’s Revised Estimates Current Year’s Budget Estimates Projections for next two years (ix) for Form D-1, the following form shall be substituted, namely:- “Form D – 1 [See rule 6] TAX REVENUES RAISED BUT NOT REALISED (principal taxes) (As at the end of Reporting Year) Amounts under dispute Amounts not under dispute (` in crore) Major Head Description Over 1 Year but less than 2 Years Over Year but less than Years Over Year but less than Years Over Years Total Over Year but less than 2 Years Over Year but less than 5 Years Over Year but less than Years Over Years Total Grand Total Taxes on Income & Expenditu re Corporatio n Tax Taxes on Income other than Corp. Tax Taxes on Commodit ies & services Central Goods and Services Tax Integrated Goods and Services Tax (IGST) 0037 Customs Union Excise Service Tax Total Note: reporting year refers to the second year preceding the year for which the annual financial statement and demands for grants are presented.”; (x) for Forms D-3, D-4 and D-5, the following forms shall be substituted, namely:- “Form D – 3 [See rule 6] Guarantees given by the Government Class (No. of Guarantees within bracket) Maximum Amount Guaranteed during the year (` in crore) Outstanding at the beginning of the year (` in crore) Additions during the year (` in crore) Deletions (other than invoked) during the year (` in crore) Guarantees valid till Invoked during the year (` in crore) Outstanding at the end of the year (` in crore) Guarantee Commission or Fee (` in crore) Other Material Details Discharged Not Discharged Receivables Received Note: The year in the above table refers to the second year preceding the year for which the annual financial statement and demands for grants are presented. Form D – 4 [See rule 6] ASSET REGISTER Assets at the beginning of reporting year Assets Acquired during the year reporting year Cumulative total of assets at the end of the reporting year Cost (` in crore) Cost (` in crore) Cost (` in crore) Physical assets: Land (Area of land) Building Office Residential Roads Bridges Irrigation Projects Power Projects Other Capital Projects Machinery & Equipment Office Equipment Vehicles Total Financial assets: Equity Investment Shares Bonus Shares Loans and Advances Loans to State Govts. Loans to UT Govts. Loans to Foreign Govts. Loans to Companies Loans to Others Other Financial Investment Total Notes: 1. Assets above the threshold value of Rupees two lakh only to be recorded. 2. This disclosure statement does not include assets of Cabinet Secretariat, central Police Organisations, Ministry of Defence, Department of Space and Atomic Energy. 3. Reporting year refers to the second year preceding the year for which the annual financial statement and demands for grants are presented. 4. Area of land in square km shall be mentioned in bracket below cost of land in each column. If, area of the land is not available, it will not be given, however, target date to compile the same will be indicated in footnote to the statement. Form D-5 [See rule 6] LAIBILITY ON ANNUITY PROJECTS Ministry/ Department Name of Project Value of the Project Total Annuity Committed Term Annuity Payment (per year) Amount of unpaid annuity liability at the end of the financial year (` crore) (` crore) (years) (` crore) Note: Financial Year mentioned in the column of unpaid annuity refers to the year for which annual financial statement is being presented”; (xi) Form D-6 shall be omitted. Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), dated the 2nd July, 2004 vide number G.S.R. 396 (E), dated 2nd July, 2004 and were subsequently amended vide the following notifications: 1. G.S.R. 41(E), dated the 23rd January, 2007; 2. G.S.R. 670(E), dated the 5th September, 2012; 3. G.S.R. 290(E), dated the 7th May, 2013; 4. G.S.R. 523(E), dated the 25th June, 2015; and 5. G.S.R. 829(E), dated the 31st October, 2015. and Published by the Controller of Publications, Delhi-110054. 1928 GI b 1928-E c RAKESH SUKUL