Ranchi, April 5: When the Jharkhand Assembly passed the Fiscal Responsibility and Budget Management Bill early this week, the state had already lost Rs 600 crore.
It was the sheer inaction of the political masters in not legislating such a law in pursuance of the Twelfth Finance Commission report that resulted into such a huge loss. The state has also been poorer by more than Rs 800 crore by not holding panchayat elections all these years.
When most states enacted the Fiscal Responsibility Legislation after the Union government adopted a law in 2003, Jharkhand chose to sleep over it. Sources in the finance department said its former secretary Rahul Sarin had made an effort, but the proposal could not come for consideration of the House.
The Twelfth Finance Commission (TWFC) had recommended that each state enact a fiscal responsibility legislation which should at a minimum provide for elimination of revenue deficit by 2009 and reduce fiscal deficit to three per cent of its gross state domestic product (GSDP) or equivalent. The bill proposes to provide a legal and institutional framework to bring down fiscal deficit, contain public debt increase and stabilise debt as a proportion of GDP over the medium term. It binds the government to a pre-specified path of fiscal consolidation.
The Centre had introduced the debt swap scheme in 2003-04 providing for states to swap their high-cost loans with low interest ones. But Jharkhand failed to make use of it as it had not enacted the fiscal responsibility legislation. The bill proposes to promote greater transparency and demystify the exercise of budgeting.
Current disclosures are primarily based on budget documents and the annual accounts laid on the table of the legislature. While the budget documents are generally not comprehensible to common man, there is usually a time lag of two years before the annual accounts are made public after they are audited and duly certified by the CAG.
According to finance secretary Mukhtiyar Singh, the bill makes both the political masters as well as bureaucrats accountable and reduce manoeuvrability to a great extent. The officers will have to make inhouse exercise before seeking funds in the budget, he added.
The bill provides for laying before the House, along with the annual budget in each financial year, the medium-term fiscal policy statement and the fiscal policy strategy statement.
Significantly, the House did not debate the Bill much before approving it.