Shimla: The Himachal Pradesh government has decided to raise a loan of ₹1,500 crore during the ongoing monsoon session to manage its financial commitments. The borrowing will be done in two installments—one of ₹1,000 crore and the other of ₹500 crore. The Reserve Bank of India will conduct the auction for this borrowing on August 26, and the amount is expected to be credited to the state treasury on August 28. The ₹1,000 crore loan has been planned for a tenure of 15 years, while the ₹500 crore loan will be for 10 years. Officials have clarified that this borrowing is within the limit set by the central government for the current financial year.
The decision comes at a time when the state needs around ₹2,000 crore every month for the payment of salaries and pensions, and the treasury balance has to be maintained before the next disbursement cycle. The move underlines the increasing financial pressure on the hill state, which has been grappling with a severe fiscal crisis for the past several years.
According to budget documents, Himachal Pradesh’s debt is projected to cross ₹85,000 crore in the current financial year, and nearly one-fourth of its annual revenue receipts are spent on debt servicing alone. Experts have expressed concern that a significant portion of these borrowings is being used to meet routine expenses such as salaries and pensions rather than for capital investment or infrastructure development. This trend, they warn, could lead to a debt trap, where new loans are taken primarily to repay old ones and cover recurring liabilities.
Himachal’s economy relies heavily on sectors like tourism, hydroelectric power, and horticulture, but recent years have seen revenue collection hit by natural disasters, climate change impacts, and a slowdown in economic activity. The state also faces a heavy pension and salary burden along with rising expenditure on welfare schemes, while its own tax revenue base remains limited. Under the Fiscal Responsibility and Budget Management norms, states are allowed to borrow up to 3% of their Gross State Domestic Product, and Himachal is already close to this ceiling.
Economists point out that the state’s dependence on loans for day-to-day expenditure is unsustainable and poses a long-term risk to fiscal stability. With mounting liabilities and few new sources of revenue, the government’s financial position remains under severe strain, making fresh borrowings inevitable to keep the administrative machinery running.
