GOVERNMENT OF ANDHRA PRADESH ABSTRACT Andhra Pradesh Fiscal Responsibility and Budget Management Rules, 2006 — Notification — Orders ~ Issued FINANCE (G.I) DEPARTMENT G.0.Ms\No. 183 Dated: 30 -6-2006. Read: 1. Andhra Pradesh Fiscal Responsibility and Budget Management Act, 2005 (Act No.34 of 2005). 2, Andhra Pradesh Fiscal Responsibility and Budget Management (Amendment) Act, 2006 (Act No.15 of 2006). The following Notification will be published in the Extra-ordinary issue of Andhra Pradesh Gazette dated = —-2006. NOTIFICATION In exercise of the powers conferred by section 15 of the Andhra Pradesh Fiscal Responsibility and Budget Management Act, 2005, (Act No.34 of 2005) and the Andhra Pradesh Fiscal Responsibilty and Budget Management (Amendment) Act, 2006 (Act No.15 of 2006) the Government of Andhra Pradesh hereby makes the following rules, namely := RULES 1. Short title and commencement (1) These rules may be called the Andhra Pradesh Fiscal Responsibility and Budget Management Rules, 2006. (2) They shall come into force with effect from ~~ 2006. 2. Definitions In these rules, unless the context otherwise requires, - a, “Act means the Andhra Pradesh Fiscal Responsibility and Budget Management Act, 2005 ; b. “form” means a form appended to these rules; ©. “section” means a section of the Act; 4d, words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act.3, Macroeconomic Framework Statement ‘The Macroeconomic Framework Statement as required under Section 6, of the Act shall be in Form F-t. 4. Me 1m Term Fiscal Policy Statement (1) The Medium Term Fiscal Policy Statement, as required under sub-section (1) of section 7, of the Act shall include in Form F2 three year rolling targets in respect d the following fiscal indicators: (a) revenue deficit as a percentage of TRI (1b) fiscal deficit as a percentage of GSOP; (.¢) outstanding total liabilities as a percentage of GSDP; (2) The Medium Term Fiscal Policy Statement shall also explain the assumptions underlying the ‘above mentioned targets for fiscal indicators and an assessment of sustainability relating to the items indicated in sub-section (2) of section 7 of the Act 5, Fiscal Policy Strategy Statement ‘The Fiscal Policy Strategy Statement as required under Section 8 of the Act shall be in Form F-3. 6. Disclosures (1) The State Goverment shall, at the time of presenting the budget, make disclosures as required under section 10 together with the following statements (a) a statement of select indicators of fiscal situation in Form D1; (b) @ statement on components of State Government liabilties and interest cost of borrowings/mobilisation of deposits in Form D-2; (c) a statement on the Consolidated Sinking Fund in Form D-3; (@) a statement on guarantees given by the Government in Form D-4; (@) a statement on outstanding risk-weighted guarantees in Form D-5; (f) a statement on the Guarantee Redemption Fund in Form D-6; (g) a statement of assets in Form D-7; (h) A statement on claims and commitments made by the State Government on revenue demands raised but not realised in Form D-8; and (a statement on liability in respect of major works and contracts, committed liabilities in respect of land acquisition charges and claims on the State Government in respect of unpaid bills on works and supplies in Form D-9; () a statement giving details of number of employees in govemment, public sector and aided institutions and related salaries and pensions in Form D-10,(2) The provisions of sub-rule (1) shall be complied with not later than three years after the ‘coming into force of the Act. 7. Measures to enforce compliance In case the outcome of the quarterly reviews of trends in receipts and expenditure, at the fend of the second quarter of any financial year shows that - (i) the total non-debt receipts are less than 40 per cent of Budget Estimates for that year; or (i) the fiscal deficit is higher than 45 per cent of the Budget Estimates for that year, or (ii) the revenue deficit is higher than 45 per cent of the Budget Estimates for that year, then — (a) as required under sub-section (2) of section 11 of the Act, the State Government shall take appropriate measures and (b) as required under sub-section 3(b) of section 11 of the said Act, the Ministerin-charge of the Ministry of Finance shall make a statement in the Legislature during the session immediately following the end of the second quarter detailing the corrective measures taken and he prospects for the fiscal deficit of that financial year (BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH) P. RAMAKANTH REDDY, SPECIAL CHIEF SECRETARY TO GOVERNMENT. To All Departments of Secretariat. All Heads of Departments. Copy to: The AG., AP., Hyderabad, The Ministry of Finance, GO1, New Delhi The Reserve Bank of India, Mumbal. {FORWARDED BY ORDERI/ SECTION OFFICER.Form F -1 {See rules 3 and 4) MAGRO ECONOMIC FRAMEWORK STATEMENT T. Overview of the State Economy: [This paragraph shall contain a synopiic analysis of tend in the rate of growth of output, Information on key macroeconomic indicators shall be presented in the table at the end of this form] 2. GSDP Growth: [This paragraph shall contain an analysis of trends in overall GSDP growth and its sectoral composition ] 3. Overview of State Government Finances: [This paragraph shall detail the developments in Stale Finances including an analysis of trends in revenue collections and expenditure, and the important fiscal deficit and debt indicators and the measures taken to improve the financial position of the State Government. Trends in State Government finances shall be presented in the format appended. This will, inter alia, indicate the developments related to the Consolidated Sinking Fund, Guarantee Redemption Fund, and issuances of risk-weighted guarantees and Ways and Means Advances availed from the RBI. This paragraph may also cover analysis of finances of local bodies and State-level public sector undertakings including the progress made by them for compilation/finalisation of annual statements of accounts and Central transfers.] 4, 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. An assessment of fiscal prospects shall also be made]FA ( Contd.) Macro Economic Framework Statement Economic Performance at a Glance Table 1: Trends in Select Macroeconomic and Fiscal Indicators ‘Absolute Value] Percentage Changes (Rs. Crore) ‘April-Reporting ‘Apri-Reporting period period Previous | Curent | Previous | Current Year | Year Year Year Real Sector 1 ‘GSDP at factor cost (@) [ateurrent pres (v) | at 1993-94 price 2 | Agriculture Production Industrial Production 4, | Tertiary Sector Production Government Finances 1 Revenue Receipts @ *3) 2 Tax Revenue (2.1+2.2) 24 (Own Tax Revenue 2.2 State's Share in Central Taxes 3 Non-Tax Revenue (3.1 + 3.2) 34 State's Own Non Tax revenue 32 Central Transfers 4 | Capital Receipts (5+6+7)Previous | Current | Previous | — Current Year | Year Year Year 5 Recovery of foans 6 Other Receipts 7 Borrowing and other liabilities 8 | Total Receipts (1+ 4) 9 | Non-Plan Expenditure 10 Revenue Account Of which: 1" (@) Interest payments (b) Subsidies (©) Wages & Salaries (a) Pension Payments 2 Capital Account 13. | Plan Expenditure “ Revenue Account 15 Capital Account 16 _| Total Expenditure (9+13) 17 | Revenue Expenditure (10+14) 18 | Capital Expenditure (12+15) 19. | Revenue Deficit (17-1) 20 | Fiscal Deficit (1641+5+6)} 21 | Primary Deficit (20-114) Memo: ‘Average amount of WMA from RBIS ‘Average amount of OD from RBI * Number of days of OD Number of occasions of OD * Date will relate to the period up to which information for the current year is available, To facilitate comparison, date of previous year corresponds to the same period of current year, Accordingly, reporting period may vary for different items, ‘The average amount of WMAJOD Is calculated by summing up the outstanding amount of WMA as on each day (including holidays) and dividing by the total number of days during April- Reporting period.Previous Year (Y- 2) Actuals Form F-2 (See rules 4 and 5) MEDIUM TERM FISCAL POLICY STATEMENT Current Year (Y-1) Budget Estimates. (@e) indicators Curent Year (Y-1) Revised Estimates (RE) ‘Ensuing Year (Y): Budget Estimate 8 (BE) "Targets for next Two Years Yer #2 7. Revenue Deficit as percentage of Total Revenue Receipts (TRR) 7%, Fiscal Defi as Percentage of GSDP 3, Total outstanding Liabilities as percentage of GSDP- (any addtional target(s)] 5. Assumptions underlying the Fiscal Indicators 1. Revenue receipts (a) Tax-revenue Sectoral and GSDP growth rates (b) Nontax-revenue - Policy stance (c) Devolution to Local Bodies (d) Share of own tax revenue fo total tax revenue (e) Share of own non-tax revenue to total non-tax revenue 2. Capital receipts - Debt stock, repayment, fresh loans and policy stance (@) Loans and advances from the Centre (b). Special securities issued to the NSSF (c) Recovery of loans and advances (@)_ Borrowings from financial institutions (©) Other receipts (net) — small savings, provident funds, ete. (f) Outstanding Liabilties - Internal Debt and Other Liabilities3. Total expenditure - Policy Stance (g) Revenue account (@ Interest payments — (a) on borrowings during the year (aggregate and category-wise); (b) on outstanding liabilities - ()) (aggregate and calegory- wise) (i) Major subsidies (i) Salaries (v) Pensions (%) Others. (h) Capital account @ Loans and advances i) Capital Outlay 4. GSDP Growth C. Assessment of sustainability relating to - () The balance between receipts and expenditure in general and revenue receipts and revenue expenditure in particular. The Medium Term Fiscal Policy Statement may specify the tax-GSDP ratio, own tax-GSDP ratio and State's share in Central tax — GSDP 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 conceming the same. Expenditure on revenue account, both plan and non-plan, may be also discussed with particular emphasis on the measures proposed to meet the overall objectives. It may discuss policies to contain expenditure (on salaries, pension, subsidies and interest payments. An assessment of the capital receipts shall be made, including the borrowings and other iabilies, as per policies spelt out. The statement shall also give projections for GOP and discuss it on the basis of assumptions underlying the indicators in achieving the sustainability objective. (i) The use of capital receipts including market borrowings for generating productive assets. The Medium Term Fiscal Policy Statement may specify the proposed use of capital receipts for generating productive assets in different categories. It may also spell out the proposed changes ‘among these categories and discuss them in terms of the overall policy of the Government. (ii) The estimated yearly pension liabilities worked out on actuarial basis for the next ten years. In case it is not possible to calculate the pension liabilities on actuarial basis during the period of first three years after the coming into force of this Ordinance, the State Government may, during that period, estimate the pension liabilities by making forecasts on the basis of trend growth rates (ie. average rate of growth of actual pension payments during the last three years for which data are available.Form F -3 (See rules 4 and 5) FISCAL POLICY STRATEGY STATEMENT ‘A: Fiscal Policy Overview: [This paragraph will present an overview of the fiscal policy ‘currently in vogue.] B: Fiscal policy for the ensuing year: [This paragraph shall have, inter alia, six 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 exemption in various taxes and how far it relates to principles regarding tax ‘exemptions. (2) Expenditure Policy Under expenditure policy, major changes proposed in the allocation for expendi shall be indicated. It shall also contain an assessment of principles regarding the benefits and target group of benef (3) Borrowings and Other Liabilities, Lending and Investments In this sub-paragraph on borrowings, the policy relating to internal debt, including the access to WMAIOD facility from the Reserve Bank of India, Government lending, investments and other activities; including principles regarding average maturity structure, bunching of repayments, etc. shall be indicated. The borrowings by Public Sector Undertakings and Special Purpose Vehicle, lending, investments, pricing of user charges on public goods and utlities and description of other activities, and activities of Public Sector Undertakings which have potential budgetary implications; and the key fiscal measures and targets pertaining to each of these shall be indicated, (4) Consolidated Sinking Fund In this sub-paragraph, the policy related to the Consolidated Sinking Fund (CSF) shall be indicated (6) Contingent and other Liabilities ‘Any change in the policy on contingent and other liabilities, in particular guarantees, which have potential budgetary implications shall be indicated. Any change in the policy related to borrowings by special purpase vehicle (SPV) and other equivalent instruments where liability for repayment is on the Stale Goverment shall be indicated. The policy on building up of the Guarantee Redemption Fund (GRF) and commission chargesicollected for guarantees issued shall also be indicated. (©) Lew of User Charges ‘Any change proposed in the levy of user charges of public services shall be spelt out,©, Strategic priorities for the 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] D: Rationale for Policy changes: [(1) The rationale for policy changes consistent with the Medium Term Fiscal Policy ‘Statement, 1g Budget shall be spelt out. respect of taxes proposed in the ens (2) The rationale for major policy changes in respect of budgeted expenditure including ‘expenditure on subsidies and pensions 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 the charges for public utlities. shall be spelt out) E. Policy Evaluation: [The paragraph shall contain an evaluation of the changes proposed in the fiscal policy for the ensuing year with reference to fiscal deficit reduction and objectives set out in the Medium Term Fiscal Policy Statement.)FORM D1 [See rule 6] SELECT FISCAL INDICATORS Tem Previous Year (Actuals) Current Year (RE) 10. 14 12. 13, 14, 15. Gross Fiscal Deficit as Percentage of GSDP Revenue Deficit as Percentage of Gross Fiscal Deficit Revenue Deficit as Percentage of GSDP Revenue Deficit as Percentage of TRR Total Liabilities -GSDP Ratio (%) Total Liabilities - Total Revenue Receipts (%) Total Liabilities —State's Own Revenue Receipts (%) State's Own Revenue Receipts to Revenue Expenditure (%) Capital Outlay as Percentage of Gross Fiscal Deficit Interest Payment as Percentage of Revenue Receipts Salary Expenditure as Percentage of Revenue Receipts Pension Expenditure as Percentage of Revenue Receipts Non-developmental Expenditure as Percentage of aggregate disbursements Gross Transfers from the Centre as Percentage of Aggregate Disbursements Non-tax Revenue as Percentage of TRRFORM D-2 [See rule 6] ‘A. Components of State Government Liabilities (Rs. crore) Category | Raised during the RepaymentRedempii] _ Oulstanding Amount Fiscal Year on during the Fiscal (End-March) Year Previous| Current | Previous] Current] Previous] Current Year Year year year year year (Actuals) (RE)} (Actuals) (RE)} (Actuals) (RE) Warket Borrowings Loans trom Centre Special Securities issued to the NSSF Borrowings from Financial Institutions! Banks WMAIOD from RBI ‘Small Savings, Provident Funds, ete Reserve Funds! Deposits ‘Other Liabilities TotalFORM D-2 [See rule 6] B, Weighted Average Interest Rates on State Government Liabilities (per cent) Raised during the Fiscal ‘Ouistanding Amount (End-March) Year* Category Previous | Current Year Previous Current year Year (RE) year (RE) (Actuals) (Actuals) Market Borrowings Loans From Centre Special Securities issued to the NSSF Borowings from Financial Institutions! Banks WHATOD from RBI ‘Small Savings, Provident Funds, ete Reserve Funds! Deposits ‘Orer Liabilities Total® * Weighted average interest rate where the respective weight Is the amount borrowed, This is. calculated on contractual basis and then annualized. * Weighted average interest rate where the weights are the amount of the respective components of State Goverment liabilities.Example 1 ‘Suppose the State Government raised resources from the market on three occasions during a fiscal year for an aggregate amount of Rs.6,000 crore, The annual rates of interest were 10, per cent, 12 per cent and 14 per cent, for Rs.1,000 crore, Rs.2,000 crore and Rs.3,000 crore, respectively. The weighted average interest rate in respect of the resources raised during the year would, therefore, be [Rs.1000*(10/100) + 2000*(12/100) + 3000 * (14/100)}/(1000+2000+3000)] “100 = [100 +240 + 420/6000"100 = (760/6000)"100 12.67% Example 2 ‘Suppose the previous and current years pertain to 2002-03 and 2003-04, Suppose the total outstanding amount of special securities issued by the State Government to the NSSF was Rs.1,000 crore as at end-March 2002 and Rs.1,500 crore as at end-March 2003, Suppose the total interest cost incurred by the State Goverment on this account during 2002-03 and 2003-04 amount to Rs.100 crore and Rs.120 crore, respectively, Then the weighted average interest cost ‘on the outstanding amount of special securities issued to the NSSF during the previous year (i.e. 2002-03) is equal to 100/1000 = 10 per cont. Similaty, the weighted average interest cost on the outstanding amount of special securities issued to the NSSF during the current year (1. 2003- 04) is equal to 120/1500 = 8 per cent.FORM D3 [See rule 6] Consolidated Sinking Fund (CSF) (Amount in Rs. Crore) Outstanding | Additions | Withdrawals | Outstanding | (ayy ‘Aaaiions | Witharaw- | Outstanding | (ey Stock balance in | tocsF | fromcsF | balance in | Outstanding | tocsF | als from | atthe end | of SLR csr atthe | during the | auringthe | CSF attne | Stock of | during the | CSFduring | of current | Borrowings beginning | previous | previous | endof the | SLR current | thecurrent | year! (2%) ofthe year | year previeus | Borrowings | year year beginning previous year! (%) of ensuing year beginning year of current year o a @ w o @ 7 @ @FORMD -4 [See rule 6] Guarantees given by the Government Catogary (No. oF | Maximum ‘Outstanding at] Additions during ] Reductions Guarantees Amount the beginning of | the year during the year within bracket) | Guaranteed the year (Rs. crore) (other than during the year | (Rs. crore) invoked during (Rs. crore) the year) ARs. crore) 7 z 3 a 5 Thvoked during the year ‘Ouistanding at ] Guarantee Commission or ] Remarks (Rs. crore) the end of the | Fee year (Rs. crore) Discharged | Not (Rs. crore) Recewvable | Received discharged = 7 e v 0 TT Note : Reporting year refers to the second year preceding the year for which the Budget is presented.FORM D5 [See rule 6] Outstanding Risk weighted Guarantees (Amount in Rs. Crore) Detar Risk weights] Amount Risk weighted Probability (per cent) outstanding as in | outstanding the Previous | guarantee in the Year and the | previous year Curent Year | and the current year Direct Liabilties | 100 High Risk 5 Medium Risk | 50 Tow RIK, B Very Law Risk |S Totar Outstanding Note: The risk-weights have been pre-specified for various risk categories. FORM D6 [See rute 6] Guarantee Redemption Fund (GRF) (Amount in Rs, Crore) Oulstanding | Ouistanding | Amount of os EE invoked Amountin | Guarantees | GRF during | fromthe | Amount in GRF at guarantees | GRFatthe | Likelytobe | the current | GRF during | the end of te atthe end of | endofthe | invoked year the curent | current year the previous | previous year | during the year year current year 7 gy oy w ow 7 Notes: (i) As per the terms of the GRF, during each year, the Government is required to contribute an amount equivalent at least to 1/5” of the outstanding invoked guarantees plus an amount likely to be invoked as a result of the incremental guarantees issued during the year. li) Previous year refers to the year preceding the current year.FORM D -7 [See rule 6] STATEMENT OF ASSETS ‘Asses atthe beginning of the reporting year ‘Assets acquired during the reporting year Cumulative Total oF assets at the end of the reporting year Book Value (Rs. er) Book Value (Rs. cr) Book Value (RS. or.) Financial assots: Loans and advances Loans to Local Bodies Loans to companies Loans to others Equity Investment Shares Bonus shares Investments in Gol dated securities/Treasury Bills Investments in 14-day Intermediate Treasury Bills Other financial investments (please specity) Total Physical assets: Land Building ~ Office/Residential Roads Bridges Inigation Projects Power projects Other capital projects Machinery & Equipment Office Equipment Vehicles TotalNotes: 1, Assets above the threshold value of Rupees two lakh only to be recorded, 2. Reporting year refers to the second year preceding the year for which the annual financial statement and demands for grants are presented 3. The Statement in respect of physical assets is to be prepared based on asset register maintained by the Government. The value to be indicated would be book-value, Le acquisition cost netted for depreciation/impairment..FormD -8 [See rule 6] ‘TAX REVENUES RAISED BUT NOT REALISED (principal taxes) (As at the end of the reporting year) ‘Amount under disputes ‘Amount net under disputes (Rs. crore) (Rs. crore) Major] —Deserpion war] Over] Over war] Over] Over Head rfats rfats year | years | years | over year | years | years | over Grand ut | out | out | 10 | tor} but | but | out | 10 | Tota | Total toss | toss | tess | years toss | toss | tess | years than | than | tran than | than | than two | 5 | 10 two | 5 | 10 years | years | years years | years | years Taxes on Income & Expenditure ‘Agricultural Income Tax Taxes on Professions, Trades, callings and ‘employment Taxes on Property and capital Services Tand Revenue ‘Stamps and Registration foes Urban immovable property tax Taxes on ‘Commodities and Services ‘Sales TaxCentral Sales Tax Sales Tax on Motor Spirit and Lubricants ‘Surcharge on Sales Tax State Excise Taxes on Vehicles ‘Other Taxes TOTAL Note : Reporting year refers to the second year preceding the year for which the annual financial statement and demands for grants are presented,Form D -9 [See rule 6] ‘Statement of Miscellaneous Liabilities: Outstandings (Rs. crore) Outstanding Amounts Major Works and Contacts Committed Tiabiliies in respect of land acquisition charges Claims in respect of unpaid bils on works and supplies 'S The outstanding amount pertains to the end-March position Tor the year before the current year.Form—D-10 (See rule 6) NUMBER OF EMPLOYEES IN PUBL SE EXPENDITURE OF STATE GOVERNMENT STOR UNDERTAKINGS & AIDED INSTITUT! TON ‘SI.No. Sector Name Total Related Expenditure Employees as| during (Rs. in on 31-03- crores) ‘On Salary _[ On Pension. State Goverment 2 [fudiciary 3 _ Aided Educational Institutions 4 [Zilla Praja Parishads 3 |Mandal Praja Parishads © [Gram Panchayaths 7__ | Municipal Corporations [Municipalities 9 |Urban Development Authorities 10 [Agricultural Market Committees TT _ [Zilla Grandhalaya Samasthas 12 _ |State Public Sector Undertakings 13 [Universities 14 [Cooperative institutions and other Government Bodies 15 _ [Temples Total