Amendment status not verified — confirm the current text below against the official source.
Removal of difficulties STATEMENT OF OBJECTS AND REASONS The framework for budgeting, accounting and auditing for the State Government are specifically provided in various Code and Manuals framed by Government under Article 283 of the Constitution of India. The budget of the State is prepared by the Government and is put to vote before both the Houses of Legislature. Once the budget is passed by both the houses of Legislature, as laid down in the Constitution of India, the expenditure is met out of the Consolidated Fund as per the budget, duly passed by the Legislature. The deviations from the budget, as voted by the Legislature, can only be made as laid down in Karnataka Financial Code and is brought to the notice of Legislature in due course. The Comptroller and Auditor General performs the audit and account functions for the State Government. Report of the Comptroller and Auditor General is submitted to the Governor who causes them to be laid before the Legislature of the State. These reports are referred to the Public Accounts Committee and the report of the Committee along with the report of the Comptroller and Auditor General is put on the table of the House. With such a framework, the State Government, to ensure fiscal stability and sustainability, introduced the Karnataka Fiscal Responsibility Act, 2002, which mandates the State Government to have a Medium Term Fiscal Plan (MTFP), a rolling document for four years specifying targets for prescribed parameters. The Act also specifies fiscal management principles to be followed by the State Government. In furtherance to Medium Term Fiscal Plan, the State Government decided to disintegrate the MTFP on departmental lines and prepare Departmental Medium Term Fiscal Plan for each department along with the MTFP for the entire State. It is now felt that a similar framework for budgeting, accounting and auditing should be there for the Local Fund Authorities (LFA). There is a need for an Act which, (1) mandates a Medium Term Fiscal Plan for the Local Fund Authorities. (2) lays down principles for financial management. (3) ensures transparency in Fiscal Management at the local level. (4) ensures proper procedure for preparation, submission and audit of accounts. (5) ensures proper scrutiny and adherence to the audit reports. (6) lays down measures to enforce compliance to the provisions of the Act. Hence the Bill. [LA Bill No. 22 OF 2003] (Entries 5 and 32 of List-II of Seventh Schedule to the Constitution of India) 2 KARNATAKA ACT NO 41 OF 2003 (First published in the Karnataka Gazette Extra-ordinary on the sixth day of September, 2003) THE KARNATAKA LOCAL FUND AUTHORITIES FISCAL RESPONSIBILITY ACT, 2003 (Received the assent of the Governor on the fifth day of September, 2003) An Act to provide for the responsibility of Local Fund Authorities to ensure best practice of financial management of local funds and to enhance the scope for improving social and physical infrastructure and human development by achieving sufficient revenue surplus, ensuring prudent management of public fiscal operations of the Local Funds and use of a medium term fiscal frame work, and for matters connected therewith or incidental thereto. Whereas it is expedient to provide for the responsibility of Local Fund Authorities to ensure fiscal stability and sustainability and to enhance scope for improving social and physical infrastructure and human development by achieving sufficient revenue surplus, performance enhancement, citizen participation and transparency while removing impediments to the effective conduct of fiscal policy and enabling prudent financial management through appropriate modern systems and with greater transparency in fiscal operations of the Local Funds with the use of a medium-term fiscal frame work, and for matters connected therewith or incidental thereto. Be it enacted by the Karnataka State Legislature in the fifty-fourth year of the Republic of the India as follows:-