The Congress and the BJP have been blaming each other for pushing the state into a huge debt trap. However, the fact remains that Himachal is on the verge of financial bankruptcy, as its total debt has mounted to over Rs 1.03 lakh crore amid little hope of help from the Central Government.
Himachal’s cumulative debt burden has reached Rs 103,563 crore and it has become the third most debt-stressed state. The situation is grim and what makes the matter worse is that there is little hope of financial help from the Central Government. The state government accuses the Central Government of meting out a step-motherly treatment to Himachal.
The state struggles every month to pay salaries to its 2.25 lakh regular employees and pension to retired employees. Of every Rs 100, the government spends Rs 25 on the payment of salaries, Rs 20 on pension, Rs 12 on interest payment, Rs 10 on debt payment, Rs 9 for grants to autonomous bodies and only Rs 24 is left for development.
The reducing revenue deficit grant (RDG) from the Central Government is the biggest cause for concern for the state, which will reduce to Rs 3,257 crore in 2025-26 from Rs 6,258 crore last year. The Goods and Services Tax (GST) compensation to all states had ended in June 2022, hitting Himachal that had very few revenue generating resources.
The reduction in capital expenditure and a miniscule increase in the budget size by mere Rs 71 crore over last year clearly reflects the fiscal stress the state is facing. The total fiscal deficit in 2025-26 is expected to be Rs 10,338 crore, which is 4.04 per cent of the SGDP.
The Congress government headed by Sukhvinder Singh Sukhu has raised Rs 29,046 crore loans since assuming power in December 2022. “Seventy per cent of the total loans we have raised has gone towards the repayment of old debt raised by previous BJP regime and only Rs 8,693 crore is left for development,” says Sukhu.
The Chief Minister has admitted that as the Central Government has capped the loan raising limit of Himachal at three per cent of the GSDP, there is no option but to exceed this limit. There is also a cap on seeking funds under externally-aided projects, which, too, is impacting development works, he has added.
