Shimla, September 02: Himachal Pradesh is facing severe financial crisis, with the state’s debt rising to over ₹90,000 crore. The situation has worsened since the Congress government led by Chief Minister Sukhvinder Singh Sukhu came to power in December 2022, and ₹24,176 crore in new debts have been accumulated. Despite efforts to manage the budget, including repaying ₹5,864 crore in past debts and borrowing ₹2,810 crore from the General Provident Fund, the financial stress remains heavy.
The state’s revenue challenges have been further compounded by several factors. The discontinuation of GST compensation after 2022 has led to a reduction in annual revenue by ₹2,500 to ₹3,000 crore. The fiscal stress has been further aggravated by the central government withholding ₹9,200 crore from the New Pension Scheme (NPS). Additionally, the state’s borrowing limit has been cut by ₹2,000 crore, further limiting financial flexibility.
Himachal Pradesh’s fiscal troubles have significant implications on governance and development. To overcome the budget crisis, the government has been forced to defer salaries of the chief minister, ministers and other officials. As a result, about 72% of the state’s revenue is spent on salaries, pensions and loan repayments, leaving only 28% for development projects. The delay in receiving ₹9,042 crore under Post Disaster Need Assessment (PDNA) from the central government has further hampered infrastructure repair and development activities.
Complicating the situation further, the state is still awaiting ₹9,042 crore under Post Disaster Need Assessment (PDNA) from the central government. This delay has hampered efforts to repair and rebuild the damage caused by the 2023 monsoon, further exacerbating the infrastructure challenges faced by the state.
BJP general secretary Bihari Lal Sharma has criticized the Congress government for its handling of the state’s finances. Sharma accused the Congress administration of making a “failed attempt” to manage the state by piling up debt. He claimed that the Congress leader was using misleading figures to divert public attention from real financial issues.
Sharma highlighted that the fiscal situation is expected to worsen significantly in the coming years. He gave a detailed account of the 16th Finance Commission estimates, which indicated that the state would require ₹12,361 crore in the financial year 2026-27 for loan instalments and interest. This liability is projected to rise to ₹14,942 crore by 2030-31. The total five-year liability is expected to reach ₹70,718 crore, including ₹26,101 crore in loan instalments and ₹44,617 crore in interest.
Sharma also criticized the Congress government for allegedly neglecting development efforts. He pointed out that while the Centre provides over ₹15,000 crore annually to Himachal Pradesh, this money is mainly used to cover salary liabilities rather than development projects.
The deteriorating financial situation in Himachal Pradesh highlights the urgent need for strategic financial management and adequate support from the central government to stabilize the state’s economy and promote sustainable development.
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