Shimla: The Comptroller and Auditor General (CAG) has cautioned Himachal Pradesh about its growing fiscal vulnerability, highlighting that the revival of the Old Pension Scheme (OPS) without creating a dedicated pension fund will significantly increase financial pressure in the coming years. The CAG report on state finances for 2023-24 was tabled in the Assembly on Friday by Deputy Chief Minister Mukesh Agnihotri.
According to the report, the state government restored OPS from April 1, 2023, but no separate fund has been created to manage the future pension liabilities. The expected financial impact will be met from the state’s own resources, while funds held with the Government of India and the Pension Fund Regulatory and Development Authority (PFRDA) will be used partially. “While assessing the debt sustainability of the state, the OPS burden must be factored in,” the report stated.
Subsidy Burden Rising Steadily
The report revealed that subsidies under uncommitted expenditure rose from ₹1,067.78 crore in 2019-20 to ₹1,768.35 crore in 2023-24, accounting for 9.16% to 13.64% of uncommitted revenue expenditure during this period. Electricity subsidy alone made up 35% to 53% of the total subsidy. In addition, the state government provided guarantees on loans worth ₹731.09 crore in 2023-24, increasing future liabilities.
Receipts vs Expenditure Gap Expands
Between 2019-20 and 2023-24, revenue receipts grew from ₹30,742.41 crore to ₹39,173.04 crore, with an average annual growth of 4.92%. In contrast, revenue expenditure rose sharply from ₹30,730.43 crore (19.31% of GSDP) to ₹44,731.63 crore (21.56% of GSDP), growing at an average rate of 8.97%. Revenue expenditure consistently remained between 85% and 89% of total expenditure.
Capital expenditure in 2023-24 was ₹5,629.79 crore—only 11.16% of total expenditure—while just 37.78% of borrowings were used for capital purposes.
Dependence on Central Grants
The share of grants-in-aid in revenue receipts ranged from 38.14% to 55.06% during 2019-24, indicating heavy reliance on central assistance. Capital receipts, including borrowings, increased from ₹4,169.72 crore in 2019-20 to ₹7,035.23 crore in 2023-24.
Deficit Remains a Major Concern
Himachal posted a revenue deficit of ₹6,336 crore in 2022-23 and ₹5,558.59 crore in 2023-24, despite receiving revenue deficit grants of ₹9,377 crore and ₹8,058 crore in the respective years. Fiscal deficit also remained high at ₹12,380 crore in 2022-23 and ₹11,266 crore in 2023-24. From 2019-20 to 2023-24, the fiscal deficit widened from ₹5,597.06 crore (3.52% of GSDP) to 5.43% of GSDP.
The CAG has recommended improving budget estimate accuracy and exercising fiscal prudence to stabilise debt. It warned that growing liabilities, high subsidies, loan guarantees, and OPS-related expenditure pose a serious threat to debt sustainability.
Himachal Pradesh, already struggling with a debt of nearly ₹1 lakh crore and limited revenue growth, faces mounting fiscal stress. The restoration of OPS without a dedicated fund has added another layer of financial risk for the state’s fragile economy.
