Section 4 in The Arunachal Pradesh Fiscal Responsibility (and Budget Management) Act, 2006
4. Fiscal Management Principles.
(1)The State Government will be guided by the following fiscal management principles :(a)maintain Government debt at prudent levels;(b)manage guarantees and other contingent liabilities prudently, with particular reference to the quality and level of such liabilities;(c)ensure that policy decisions of the Government have due regard to their financial implications on future generations;(d)ensure that borrowings are used for productive purposes and accumulation of capital assets, and are not applied to finance current expenditure;(e)ensure a reasonable degree of stability and predictability in the level of the tax burden;(f)maintain the integrity of the tax system by minimizing special incentives, concessions and exemptions;(g)pursue tax policies with due regard to economic efficiency and compliance costs;(h)pursue non-tax revenue policies with due regard to cost recovery and equity;(i)pursue expenditure policies that would provide impetus for economic growth, poverty reduction and improvement in human welfare;(j)build up a revenue surplus for sue in capital formation productive expenditure;(k)ensure that physical assets of the Government are properly maintained;(l)disclose sufficient information to allow the public to scrutinize the conduct of fiscal policy and the state of public finances;(m)ensure that Government uses resources in ways that give best value for money; and also ensure that public assets are put to best possible use;(n)minimize fiscal risks associated with running of public sector undertakings and utilities proving public goods and services;(o)manage expenditure consistent with the level of revenue generated;(p)formulate budget in a realistic and objective manner with due regard to the general economic outlook and revenue prospects, and minimize deviations during the course of the year; and(q)ensure discharge of current liabilities in a timely manner.(2)The State Government shall take appropriate measures to eliminate the revenue deficit and contain the fiscal deficit at 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-(a)[ maintain at least the level of revenue surplus in the base year (average of 2001-02 to 2003-04), in the subsequent years beginning from the initial financial year on 1st day of April, 2005 and ending on 31st day of March, 2009. [Substituted by Act No. 14 of 2006, Section 3(1) (w.e.f. 1.4.2005).](b)maintain revenue surplus as a percentage of Gross State Domestic Product (GSDP) in each of the financial year beginning on the 1st day of April, 2005 in a manner consistent with goal set out in clause (a);(c)to reduce fiscal deficit to not more than three percent of the estimated Gross State Domestic Product (GSDP) within a period of four financial years beginning from the initial financial year on the 1st day of April, 2005 and ending on the 31st day of March, 2009.](d)reduce fiscal deficit as a percentage of Gross State Domestic Product (GSDP) in each of the financial year beginning on the 1st day of April, 2005 in a manner consistent with the goal set out in clause (c); and(e)the Constitution of India provides that a State may borrow within the territory of India upon the security of its Consolidated Fund, within such limits as may from time to time be fixed by an Act of its Legislature. But no such Act has been passed by the State so far. However, the State Government will be very conservative in giving guarantee.(f)[ bring special report along with the budget giving in details of numbers of employees in Government, public sector and aided Institutions and related salaries.] [Inserted by Act No. 14 of 2006, Section 3(2) (w.e.f. 1.4.2005).]Provided that [revenue surplus may decrease] [Substituted for the words 'revenue deficit' by Act No. 14 of 2006, Section 3(3) (w.e.f. 1.4.2005).] and fiscal deficit may exceed the limits specified under this sub-section due to ground or grounds of unforeseen demand on the finances of the State Government due to national security or natural calamity, subject to the condition that the excess beyond limits arising due to natural calamities does not exceed the actual fiscal cost that can be attributed to the calamities :Provided further that the ground or grounds specified in the first proviso shall be placed before the House of Legislature, as soon as may be, after it becomes likely that such deficit amount may exceed the aforesaid limits, with an accompanying report stating the likely extent of excess, and reasons therefor.
