Delhi govt to introduce FRBM bill for fiscal discipline, transparency

The Delhi government is set to introduce a Fiscal Responsibility and Budget Management (FRBM) bill to establish a structured framework for public finance management, enhance transparency, and ensure long-term fiscal sustainability, officials aware of the matter said on Friday

The Delhi government is set to introduce a Fiscal Responsibility and Budget Management (FRBM) bill to establish a structured framework for public finance management, enhance transparency, and ensure long-term fiscal sustainability, officials aware of the matter said on Friday.

Draft of the proposed legislation is currently being prepared, with the government planning to table it in the Assembly during the Winter Session. (HT Archive)

The draft of the proposed legislation is currently being prepared, with the government planning to table it in the Assembly during the upcoming Winter Session.

According to officials, the bill seeks to prescribe clear fiscal rules governing government borrowing, expenditure, and debt management while mandating greater accountability in budgetary decisions. The proposed law is aimed at ensuring that public finances remain stable and that market borrowings are undertaken within prudent limits.

“The bill will help the government tighten public finance management. The Delhi government had signed a memorandum of understanding (MoU) with the Reserve Bank of India (RBI) for raising funds through market borrowings at competitive rates to finance major infrastructure projects. Now that the government is taking loans, it is necessary to fix a limit,” an official said.

The proposed legislation will also outline broad fiscal objectives, including reduction of revenue deficit, containment of fiscal deficit, and maintenance of overall financial discipline, they said.

Officials said the government is also considering provisions for periodic reviews of fiscal performance under the bill. In case of significant deviation from Budget targets, the government will be required to explain the reasons before the House and spell out corrective measures, officials said.

The bill is also likely to introduce independent reviews to assess compliance with the proposed law.

Officials said the legislation is intended to institutionalise prudent financial management and bring greater transparency to Delhi’s Budget process. Once the draft is finalised, the bill will be placed before the Cabinet for approval, after which it will be sent to Lt Governor for his nod, they added.

In a separate move, the finance department has directed all departments to submit realistic Budget estimates and ensure timely utilisation of funds, after it was found that several departments sought higher allocations despite underutilising their existing budgets.

In a circular issued to administrative secretaries and heads of departments, the finance department said the issue came to light during a review meeting chaired by chief minister Rekha Gupta in April.

It observed that while some departments sought higher allocations at the revised estimates stage, their expenditure remained below the approved Budget estimates. The department also noted that many departments incurred a disproportionate share of expenditure in the last quarter of the financial year, rather than maintaining a steady pace throughout.

To improve fiscal discipline, departments have been asked to base Budget and revised estimates on realistic requirements, ensure outcome-oriented spending, and adhere to project timelines. They have also been directed to utilise at least 50 per cent of allocated funds by the end of the second quarter, 80 per cent by the end of the third quarter, and achieve full utilisation by the close of the financial year.