The Uttarakhand fiscal responsibility and Budget Management Act

THE UTTARAKHAND FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT, 2005 

[Uttarakhand Act No. 22 of 2005] 

             to provide for the responsibility of the State Government to ensure fiscal stability and 

sustainability, and enhance the scope for improving social and physical infrastructure and human 

development by achieving sufficient revenue surplus, reducing fiscal deficit and removing impediments to 

the effective conduct of fiscal policy and prudent debt management through limits on State Government 

borrowings, Government guarantees, debt and deficits, greater transparency in fiscal operations of the State 

Government and use of a medium term fiscal framework and for matters connected therewith or incidental 

thereto.  

AN 

ACT 

 

         Be it enacted in the Fifty-sixth year of the Republic of India as follow- 

Short title and  

commencement 
1. (1) This Act may be called the Uttarakhand Fiscal Responsibility and Budget 

Management Act, 2005. 

(2) It shall come into force on such date as the State Government may, by 

notification in this behalf, appoint. 

Definitions  2. In this Act, unless the context otherwise requires---- 

(a) “annual budget” means the annual financial statement laid before the house of 

State Assembly under Article 202 of the constitution; 

(b) “current year” means the year preceding the year for which budget is being 

presented; 

(c) “fiscal deficit’ means the excess of--- 

(i) total disbursements from the consolidated Fund of the State (excluding 

repayment of debt) over total receipts into the Fund (excluding the debt 

receipts) during a financial year, or 

(ii) total expenditure from the consolidated Fund of the State (including loans 

but excluding repayment of debt) over own tax and non-tax revenue 

receipts, devolution and other grants from Government of India to the 

State, and non-debt capital receipts during a financial year which 

represents the borrowing requirements, net of repayment of debt, of to 

State Government during the financial year;  

(d) “Fiscal Indicators” means the measures such as numerical ceilings and 

proportions to gross State domestic product or any other ratios, as may be 

prescribed, for evaluation of the fiscal position of the State Government; 

(e) “previous year” means the year preceding the current year; 

(f) “revenue deficit” means the difference between revenue expenditure and 

revenue receipts; 

(g) “total liabilities” means the liabilities under the consolidated Fund of the State 

and the public account of the State. 

(h) { “Interest Payment’ means the amount payable other than refund of principal 

amount on the internal debt of the State Government from the Central 

Government and on State provident funds and other liabilities in the public 

account.}
1
 

----------------------------------------------------------  

1- Add. by section 2 of UK Act no 40 of 2016. 



Medium Term 

Fiscal policy 

to be laid 

before the  

State Assembly 

3. (1) The State Government shall in each financial year lay before the State 

Assembly a Medium Term Fiscal policy along with the annual budget. 

(2) The Medium Term Fiscal Policy shall set forth a three year rolling targets for 

the prescribed fiscal indicators with specification of under lying assumptions. 

(3) In particular and without prejudice to the provisions contained in sub-section 

(2), the Medium Term Fiscal Policy shall include an assessment of 

sustainability relating to— 

(i) the balance between revenue receipts and revenue expenditure; 

(ii) the use of capital receipts including borrowings for generating productive 

assets. 

(4) The Medium Term Fiscal Policy shall, inter-alia contain— 

(a) the medium term fiscal objectives of the State Government; 

(b) an evaluation of performance on the basis of the prescribed fiscal 

indicators vis-a-vis the targets set out in the budget and the likely 

performance in the current year as per revised estimates; 

(c) a statement on recent economic trends and future prospects for growth 

and development affecting fiscal position of the State Government; 

(d) the strategic priorities of the State Government in the fiscal areas for the 

ensuing financial year; 

(e) the policies of the State Government for the ensuing financial year 

relating to taxation, expenditure, borrowings and other liabilities, 

lending and investments, pricing of administered goods and services, 

guarantees and activities of Public Sector Undertakings which have 

potential budgetary implications; and the key fiscal measures and 

targets pertaining to each of these; 

(f) an evaluation as to how current policies of the State Government are in 

conformity with the fiscal management principles set out in section 4 

and the fiscal objectives set out in the Medium Term Fiscal Policy.   

(5) The Medium Term Fiscal Policy shall be in such form as may be prescribed. 

 

Fiscal 

Management 

Principles 

4. (1) The State Government shall be guided by the following fiscal management 

principles:- 

(a) To maintain Government debt at prudent levels; 

(b) To manage guarantees and other contingent liabilities prudently, with 

particular reference to the quality and level of such liabilities; 

(c) To ensure that policy decisions of the Government have due regard to 

their financial implication on future generation; 

(d) To ensure that borrowings are used on development activities, which are 

evaluated to become self-sustained, and creation or augmentation of 

capital assets, and are not applied to finance current expenditure. 

(e) To ensure a reasonable degree of stability and predictability in the level of 

tax burden; 

(f) To maintain the integrity of the tax system by minimising special 

incentives, concessions and exemptions; 

 



  (g) To pursue tax polices with due regard to economic efficiency and 

compliance costs; 

(h) To pursue non-tax revenue policies with due regard to cost recovery and 

equity; 

(i) To pursue expenditure policies that would provide impetus to economic 

growth, poverty reduction and improvement in human welfare; 

(j) To build up a revenue surplus for use in capital formation and productive 

expenditure; 

(k) To ensure that physical assets of the Government are property maintained; 

(l) To disclose sufficient information to allow the public to scrutinize the 

conduct of fiscal policy and the state of public finance; 

(m) To 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) To minimize fiscal risks associated with running of public sector 

undertakings and utilities providing public goods and services; 

(o) To manage expenditure consistent with the level of revenue generated; 

(p) To formulate budget in realistic and objective manner with due regard to 

the general economic outlook and revenue prospects and minimize 

deviations during the course of the year; 

(q) To ensure discharge of current liabilities in a timely manner. 

(2) The State Government shall take appropriate measures to eliminate the 

revenue deficit and control the fiscal deficit at sustainable level and built up 

adequate revenue surplus. 

(3) In particular, and without prejudice to the generality of the foregoing 

provisions, the State Government shall—  

[(a) reduce the revenue deficit to nil in the four years starting from 01
st
 April, 

2011 and ending on 31
st
 March, 2015;]

1 

(b) reduce revenue deficit as percentage of Gross State Domestic product in 

each of the financial years referred to a clause (a) in a manner consistent 

with the goal set out in clause (a); 

 

 

------------------------------------------------  

1-Substituted by section 2 (i) of Uttarakhand Act No. 07 of 2011. 

 

 

 

 

 



  [(c) The fiscal deficit of the State will provide stability to the  annual limit of three 

percent of GSDP (Gross State Domestic Product). The State may get an additional 

limit of two percent of GSDP (Gross State Domestic Product) for the year 2020-

21, subject to the implementation of the following State level reforms- 

(i) Increase up to  0.50 percent without any condition. 

(ii) 1 percent in four tranches of 0.25 percent with each tranche linked to 

clearly specified measureable reform as under: 

(a) Implementation of One Nation One Ration Card System (0.25 

percent); 

(b) Ease of doing business reform (0.25 percent); 

(c) Urban Local Body/Utility reforms (0.25 percent); 

(d) Power Sector reforms (0.25 percent);  

   The detailed description of reform action is given in Annexure-1 & 2. 

(iii) Remaining  0.50 percent increase may be obtained on undertaking 3 out of 

the above 4 reforms given in para (ii).]
1
 

(d) reduce fiscal deficit as percentage of Gross State domestic product in each of 

the financial years referred to in clause (a) in a manner consistent with the goal 

set out in clause (c); 

(e)  not to give guarantee for any amount exceeding the limit stipulated under 

any rule or law of the State Government existing at the time of the coming 

into force of this Act or any rule or law to be made by the State Government 

subsequent to coming into force of this Act; 

  [(f) ensure that during the period of four financial years starting form 1
st
 April, 

2011 and ending on 31
st
 March, 2015 the total estimated debt liability does not 

exceed 41.10, 40.00, 38.50 and 37.20 percent respectively of its estimated 

gross state domestic product: 

                  Provided that revenue deficit and fiscal deficit may exceed the limits 

specified under this sub-section due to ground or grounds of unforeseen demands 

on the finance of the State Government due to internal 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: 

 

 

1- Subs. by section 2 of UK Act no 24 of 2020.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



                     Provided further that the ground or grounds specified in the first 

proviso shall be placed before the State Legislature, as soon as possible, after it 

becomes likely that such deficit amount may exceed the aforesaid limits, with 

accompanying report stating the likely extent of excess, and reasons therefor;]
1 

[(g) The State Government shall constitute a committee under the chairmanship of 

the Chief Secretary, to review the progress against above targets at least once every 

six months.]
2 

 
Measures for 

Fiscal 

Transparency  

5. (1) The State Government shall take suitable measures to ensure greater 

transparency in its fiscal operation in public interest and minimize as far as 

practicable in public interest, secrecy in the preparation of the annual budget. 

(2) In particular and without prejudice to the generality of the foregoing 

provisions, the State Government shall, at the time of presentation of the 

annual budge, disclose in a statement in the form as may be prescribe:- 

(a) the significant changes in the accounting standards, policies and practices 

affection or likely to effect the computation of prescribed fiscal 

indicators;  

(b) as far as practicable, and consistent with protection of public interest, the 

contingent liabilities created by way of guarantees, the actual liabilities 

arising out of borrowing by Public Sector Undertaking and Special 

Purpose Vehicles and other equivalent instrument where liability for 

repayment is on the State Government, allocation and commitments made 

by the State Government having potential budgetary, implication  

including revenue demand raised but not realized, tax expenditure; losses 

incurred in providing public goods, and services through public utilities 

and undertaking, liability in respect of major works and contracts, and 

subsidy payments and impact of the same on the fiscal position of the 

State including in relation to the targets referred to in sub-section (3) of 

section 4. 

 
Measured to 

enforce 

compliance  

6. (1) The Annual Budget and policies announced at the time of the budget, shall be 

consistent with the objectives and targets specified in the Medium Term 

Fiscal Policy for the coming and future years. 

(2) The Minister In-charge of the Department of Finance, shall review, every half 

yearly, the trend in receipts and expenditure in relation to the budget, remedial 

measured to be taken to achieve the budget targets, and place before the State 

Legislature the outcome of such reviews. The review report shall be in such 

form as may be prescribed. 
 

1. Substituted by section 2 (iii) of Uttarakhand Act No. 07 of 2011. 

2. Added by section 2 (iv) ibid.  

 

 

 

 

 

 

 

 

 

 

 

 

 



  (3) The review shall explain--- 

(a)  any deviation or likely deviation in meeting the obligations cast on the 

State Government under this Act;  

(b) whether such deviation is substantial and relates to the actual or the 

potential budgetary outcomes, and how much of the deviation can be 

attributed to general economic environment and to policy changes by the 

State Government; and 

(c) the remedial measures the State Government proposes to take. 

(4) Wherever there is a prospect of either shortfall in revenue or excess of 

expenditure over pre-specified levels for a given year on account of any new 

policy decision of the State Government that affects either the State 

Government or its public sector undertakings, State Government, prior to 

taking such policy decision, shall take measures to fully offset the fiscal 

impact for the current and future years by curtailing the sums authorized to be 

paid and applied from and out of the consolidated Fund of the State under any 

Act to provide for the appropriation of such sums, or by taking interim 

measures for revenue augmentation, or by taking up a combination of both:   

Provided that nothing in this sub-section shall apply to the expenditure 

charged on the consolidated fund of the State under clause (3) of Article 202 

of the constitution: 

Provided further that, while adhering to the fiscal years, the State 

Government will give priority to protect certain expenditure defined in the 

Medium Term Fiscal Restructuring Policy as “High Priority Development 

Expenditure” (including, inter alia) from curtailment or may impose a recede 

or partial curtailment. 

(5)  Whenever one or more supplementary estimates are presented to the State 

Assembly, the State Government shall also present an accompanying 

statement indicating the corresponding curtailment of expenditure and/ or 

augmentation of revenue to fully offset the fiscal impact to the supplementary 

estimates in relation to the budget targets of the current year and the Medium 

Term Fiscal Policy objectives and targets for the future year. 

 

Power to make 

rules 

7. (1) The State Government may, by notification, make rules for carrying out the 

provisions of this Act. 

(2) In particular, and without prejudice to the generality of the foregoing powers 

such rules may provide for all or any of the following matters, namely:- 

(a) The fiscal indicator to be prescribed for the purpose of sub-section (2) of 

section 3 and clause (a) of sub-section(2) of section 5; 

(b) The term of the Medium Term Fiscal Policy referred to in section 3; 

(c) Any other matter which is required to be, or may be prescribed. 

 

Protection of 

action taken in 

good faith 

8. No suit or prosecution or other legal proceeding shall be against the State 

Government or any officer of the State Government for anything which is in 

good faith done or intended to be done under this Act or the rules made 

thereunder. 

 

 



 

Application of 

other laws not 

barred 

 

9. The provisions of this Act shall be in addition to, and not in derogation of the 

provision of any other law for the time being in force. 

Power to remove 

difficulties  

10. (1) If any difficulty arises in giving effect to the provisions of this act, the State 

Government may, be order published in the Gazette make such provisions not 

inconsistent with the provisions of this Act as it may deem 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 the State Assembly. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Annexure-‘1’ 

1.  Implementation of One Nation One Ration Card System: This system will 

ensure availability of ration to beneficiaries under National Food Safety Act (NFSA) and 

other welfare schemes, especially the migrant workers and their families, at any Fair Price 

Shop (FPS) across the country, and enable better targeting of beneficiaries, elimination of 

bogus/duplicate/ineligible card holders. Thus it will enhance welfare and reduce leakage. 

To ensure seamless inter-state portability of a ration card, Aadhar seeding of all ration 

cards as well as biometric authentication of  beneficiaries through automation of all Fair 

prices shops (FPSs) with installation of electronic point of sale (e-poS) devices are 

essential. Therefore, it has been decided to allow additional borrowing limit of 0.25 percent 

of GSDP on completion of both of the following actions: 

(i) Aadhar Seeding of all the ration cards and beneficiaries in the state. 

(ii) Automation of all the FPSs in the State. 

 

The  State Should complete the above mentioned actions by 31
st
 December, 2020. The 

States which complete them earlier, or have already completed them, can seek additional 

borrowing limit immediately, Department of Food and public Distribution will be the 

nodal Ministry to assess the progress of the State and recommend release of additional 

borrowing limit. The last date for recommendation to reach Department of expenditure 

(DoE) is 15
th

  January, 2021. 

 

2.             Implementation of District Level and Licensing Reforms for Ease of Doing 

Business: Ease of Doing Business is an important indicator of investment friendly 

business climate in the country and improvements in ease of doing business will enable 

faster future growth of the state economy. Therefore, in order to incentivize 

implementation of district level and licensing reforms for ease of doing business it has 

been decided to allow additional borrowing limit of 0.25 percent of GSDP for the year 

2020-21 on undertaking all the following actions by the State Government: 

i.  The State will complete the first assessment of ‘District Level Business 

Reform Action Plan’ as intimated by Department for Promotion of Industry 

and Internal Trade (DPIIT). 

ii. The State will eliminate the requirements of renewal of 

certificates/approvals/Licenses obtained by businesses for various activities 

from the authorities at the State level as per list circulated by DPIIT. 

(However, mere collection of reasonable fees with automatic non-

discretionary deemed renewal will be permissible if done in a transparent 

online, non-discretionary & automatic manner.) To become eligible, 

elimination of renewal at least of the specific items mentioned in the 

Annexure-2 should  be completed by  31
st
 January, 2021. 

iii. The State will implement computerized central random inspection system 

under the Acts as per list circulated by DPIIT wherein allocation of 

inspections inspectors is done centrally, the same inspector is not assigned 

to the same unit in subsequent years, prior inspection notice is provided to 



business owner, and inspection report is uploaded within 48 hours of 

inspection. To become eligible, implementation of computerized central 

random inspection system at least under the Acts mentioned in the 

Annexure-2 should be completed by 31
st
 January, 2021. 

DPIIT will be the nodal ministry to assess the progress and recommend the 

release of additional borrowing. The cut-off date for this will be 15
th
 

February, 2021. 

 

3.          Reforms for Strengthening local Bodies: To enable better public health and 

sanitation as well as provision of good civic infrastructure, which in turn promote 

economic growth and well-being, there is a pressing need to augment resources of urban 

local bodies (ULBs) and urban utilities, it has been decided to allow additional 

borrowing limit of 0.25 per cent of GSDP for the year 2020-21 on undertaking the 

following reforms by the State Government: 

(i) The State Government will notify (a) floor rates of property tax in ULBs 

which are in consonance with the prevailing circle rates (i.e. guideline rate 

for property Transactions) and (b) floor rates of user charges in respect of 

the provision of water-supply, drainage and sewerage which reflect 

current costs/past inflation. 

(ii) The State will put in place a system of periodic increase in floor rates the 

property tax/user charges in line with prices increases. 

   Ministry of Housing and Urban Affairs will be the nodal ministry to assess the 

progress and recommend the release of additional borrowing limit. The cut-off date 

for this will be 15
th

 January, 2021 

4.   Power Sector Reforms: Robust Systemic reforms are required to be 

undertaken by the State governments to ensure that the subsidies reach farmers/ intended 

beneficiaries without leakage and to improve the health of the power sector, in addition 

to alleviating the liquidity stress of the DISCOMS. It has been decided to allow 

additional borrowing limit for the following actions in the manner given below: 

(i) For reduction in Aggregate Technical & Commercial losses in a State as per 

targets, an additional borrowing limit of 0.05 percent of its GSDP shall be 

allowed. 

(ii) For reduction in the gap between Average cost of supply and Average 

Revenue Realization (ACS-ARR gap) in a State as per targets, an additional 

borrowing limit of 0.05 percent of its GSDP shall be allowed. [Note: In 

calculating the ACS-ARR gap, amounts remaining unpaid by state 

Government/local bodies shall be deducted from the revenues.] 

(iii) For introduction of direct Benefit Transfer to all farmers in a states in lieu  

of free electricity given to them, additional borrowing limit of 0.15 percent 

of its GSDP shall be allowed. The State Government should put in place a 

scheme whereby from the next financial year (2021-22), cash is transferred 

to the farmers through DBT instead of free electricity being provided to 



them, where as charges of the electricity are paid to the DISCOMs by 

farmers directly from the amounts given to them. To become eligible, the 

state should (a) formulate the DBT schemes and (b) implement this scheme 

at least in one district by 31
st
 December, 2020. 

The assessment of reduction in AT&C losses and in the ACS-ARR gap will be based on 

self declaration by the state Government in January, 2021. However, any major variation 

between this self declared figure and actual realization assessed later on, may affect the 

borrowing entitlement adversely in the subsequent financial year (s). Ministry of power 

would be the nodal ministry to assess the progress and recommend the release of 

additional borrowing to DoE. The last date for recommendation to reach DoE is 31
st
 

January, 2021. 

5.  The state shall exhaust the aforesaid additional borrowing of 2 percent during the 

year 2020-21 (to the extent eligible) and it will not be allowed to carry forward to the 

subsequent years. 

 

 

 



 

Annexure-‘2’ 

Implementation of removal of renewals and central Inspection System 

Renewals of : 

1. Registration under shops & Establishment Act 

2. License for contractors under provision of the Contracts Labour (Regulation and 

Abolition) Act, 1970 

3. License under The Factories Act, 1948 

4. Registration Under Legal Metrology Act 

5. Registration of establishment under the Inter State Migrant workmen (Regulation 

of  Employment and Conditions of Service) Act, 1979 

6. Drug  Manufacturing/Selling/Storage License 

7. Trade License issued by Municipal Corporations. 

 Inspections under: 

1. The Equal Remuneration Act, 1976  

2. The Minimum wages Act, 1948 

3. The Shops and Establishments Act 

4. The Payment of Bonus Act, 1965 

5. The Payment of Wages Act, 1936 

6. The Payment of Gratuity Act, 1972 

7. The Contract Labours (Regulation and Abolition) Act, 1970 

8. The Factories Act, 1948 

9. The Indian-Boilers Act, 1923 

10.  The Water (Prevention and Control of Pollution) Act, 1974 

11.  The Air (Prevention and Control of Pollution) Act, 1981 

12.  Inspection under Legal Metrology Act, 2009 and Rules.  

.......................................  

1- Ins. by Annexure 1 and 2 of UK Act no 24 of 2020.