Cabinet approves recommendations of 14th Finance Commission on fiscal deficit targets

Cabinet approves recommendations of 14th Finance Commission on fiscal deficit targets  

The Union Cabinet chaired by the Hon’ble Prime Minister has today given its approval to Recommendations on Fiscal Deficit Targets and Additional Fiscal Deficit to States during Fourteenth Finance Commission (FFC) award period 2015-20 under the two flexibility options recommended in para 14.64 to 14.67 of its Report (volume – I).FFC has adopted the fiscal deficit threshold limit of 3 per cent of Gross State Domestic Product (GSDP) for the States. Further, FFC has provided a year-to-year flexibility for additional fiscal deficit to States. FFC, taking into account the development needs and the current macro- economic requirement, provided additional headroom to a maximum of 0.5 per cent over and above the normal limit of 3 per cent in any given year to the States that have a favourable debt-GSDP ratio and interest payments-revenue receipts ratio in the previous two years. However, the flexibility in availing the additional fiscal deficit will be available to State if there is no revenue deficit in the year in which borrowing limits are to be fixed and immediately preceding year.

Since the year 2015-16 is already over, the States will not get any benefit of additional borrowings for 2015-16. However, the implications for the remaining period of FFC award, i.e., 2016-17 to 2019-20, would depend upon respective States’ eligibility based on the criteria prescribed by FFC.

For the year 2016-17, the following fiscal parameters need to be taken into account before determining states eligibility for additional borrowings of 0.5% of GSDP recommended by FFC: (Para 14.64 to 14.67 – Vol. I read with Annexure 14.2 of Vol. II of the FFC Report):

a) The revenue position of the State as per Finance Account for t-2 and as available from Revised Estimates for t-1. To illustrate, for the year 2016-17, the revenue position of the State for 2014-15 (actual as per Finance Accounts) and 2015-16 (RE) would be relevant.

b) The IP/TRR ratio and Debt/GSDP ratio based on the data as contained in Finance Account for t-2. To illustrate, for determining States’ eligibility for 2016-17, the IP/TRR ratio and Debt/GSDP ratio as disclosed in Finance Account of States for 2014-15 would be relevant.

If a State is not able to fully utilise its sanctioned fiscal deficit of 3 per cent of GSDP in any particular year during the 2016-17 to 2018-19 of FFC award period, it will have the option of availing this un-utilised fiscal deficit amount (calculated in rupees) only in the following year but within FFC award period. For the purpose of calculating the unutilised borrowing space, the unutilised fiscal space as compared to FD limit of 3% of GSDP is to be reckoned. Similarly, any additional borrowings availed beyond the State’s entitlements shall be adjusted from Net Borrowing Ceiling of the following year.

There is no financial implication for Government of India as the borrowings are made by the respective State Governments within the fiscal deficit limits laid down by Finance Commission and incorporated in FRBMA of the States. However, the State will get additional space to raise borrowings which may result in much needed Government Expenditure for Capital projects/ infrastructure.

-06-April, 2016

Cabinet approves Real Estate (Regulation and Development) Bill, 2015

Cabinet approves Real Estate (Regulation and Development) Bill, 2015

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the Real Estate (Regulation and Development) Bill, 2015, as reported by the Select Committee of Rajya Sabha. The Bill will now be taken up for consideration and passing by the Parliament.

The Real Estate (Regulation and Development) Bill is a pioneering initiative to protect the interest of consumers, promote fair play in real estate transactions and to ensure timely execution of projects.

The Bill provides uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. It will boost domestic and foreign investment in the Real Estate sector and help achieve the objective of Government of India to provide ‘Housing for All’ by enhanced private participation.

The Bill ensures mandatory disclosure by promoters to the customers through registration of real estate projects as well as real estate agents with the Real Estate Regulatory Authority. The Bill aims at restoring confidence of consumers in the real estate sector; by institutionalizing transparency and accountability in real estate and housing transactions which will further enable the sector to access capital and financial markets. The Bill will promote orderly growth through consequent efficient project execution, professionalism and standardization.

The salient features of the Bill are as under:

1. Applicable both for commercial and residential real estate projects.

2. Establishment of ‘Real Estate Regulatory Authority’ in States/UTs to regulate real estate transactions.

3. Registration of real estate projects and real estate agents with the Authority.

4. Mandatory disclosure of all registered projects, including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer etc.

5. Deposit of specified amount in a separate bank account to cover the construction cost of the project for timely completion of the project.

6. Establishment of fast track dispute resolution mechanisms for settlement of disputes through adjudicating officers and Appellate Tribunal.

7. Civil courts jurisdiction prohibited from taking up matters defined in Bill, however, consumer court allowed to hear real estate matters.

8. Promoters barred from changing plans and design without consent of consumers.

9. Provision of Appropriate Government to make rules for the matters specified in the Bill, and the Regulatory Authority to make necessary regulations.

-Cabinet, 09-December, 2015