The state government on Monday introduced in the Legislative Assembly a new Fiscal Responsibility and Budget Management (FRBM) Act with targets for total outstandings in proportion to the Gross State Domestic Product (GSDP) and fiscal deficit for 2010-11 to 2014-1015 to be maintained.
A similar Legislation, which was enacted in 2005, had set targets for the five years ending March 2010 while limiting the total outstandings to the GSDP to 35 per cent in the fifth year. The Act also provided for the condition of revenue surplus by March 2009 and for fiscal deficit below 3 per cent of the GSDP by March 2010.
The new Act 2011 is to ensure within the subsequent period of five years beginning April 1, 2010 that the total outstanding liabilities do not exceed 27.6 per cent of the GSDP as prescribed by the Centre based on the recommendations of the Thirteenth Finance Commission. The targets for each of these five years are 30.3 per cent in 2010-11, 29.6 per cent in 2011-12, 28.9 per cent in 2012-13, 28.2 per cent in 2013-14 and 27.6 per cent in 2014-15.
The Centre has suggested to the state governments to amend their respective FRBM Acts so as to get benefits of the Thirteenth Finance Commission’s recommendations.
The state’s total public debt outstandings, which stands at Rs 1,23,226 crore (RE) and Rs 1,41,150 crore (BE) for the years 2010-11 and 2011012 respectively are much lower than the envisaged targets for the years as the projected outstandings in proportion of the GSDP in 2011-12 is only 23.62 per cent, according to the budget estimates. Fiscal deficit is estimated to be 2.6 per cent and 2.95 per cent for the respective years.
