Himachal Pradesh is facing a severe financial crisis, with the state’s debt soaring past ₹90,000 crore. The situation has worsened since the Congress government, under Chief Minister Sukhvinder Singh Sukhu, took charge in December 2022, accruing ₹24,176 crore in new loans. Despite efforts to manage the budget, including repaying ₹5,864 crore in previous debts and borrowing ₹2,810 crore against the General Provident Fund, the financial strain remains overwhelming.
The state’s revenue challenges are compounded by several factors. The discontinuation of GST compensation after 2022 has led to an annual revenue reduction of ₹2,500 to ₹3,000 crore. The central government’s withholding of ₹9,200 crore from the New Pension Scheme (NPS) has further exacerbated the fiscal strain. Additionally, the state’s borrowing limit has been cut by ₹2,000 crore, further restricting financial flexibility.
Himachal Pradesh’s fiscal troubles have significant implications for governance and development. To address the budget crisis, the government has been forced to defer salaries for the Chief Minister, ministers, and other officials. Consequently, about 72% of the state’s revenue is consumed by salaries, pensions, and debt repayments, leaving a mere 28% for development projects. The delay in receiving ₹9,042 crore under the Post Disaster Need Assessment (PDNA) from the central government has further hampered infrastructure repairs and development activities.
Further complicating the situation, the state is still awaiting ₹9,042 crore under the Post Disaster Need Assessment (PDNA) from the central government. This delay has hindered essential repairs and rebuilding efforts from the 2023 monsoon damages, 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 financial situation. Sharma accused the Congress administration of making “unsuccessful attempts” to manage the state by accumulating loans. He claimed that the Congress leaders are using misleading figures to divert public attention from the real financial issues.
Sharma highlighted that the financial situation is expected to worsen significantly in the coming years. He detailed projections from the 16th Finance Commission, indicating that the state will need ₹12,361 crore in the financial year 2026-27 for loan installments and interest. This liability is projected to increase 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 installments 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, the funds are primarily used to cover salary liabilities rather than development projects.
The worsening financial situation in Himachal Pradesh highlights the urgent need for strategic financial management and substantial support from the central government to stabilize the state’s economy and foster sustainable development.
