Shimla: Himachal Pradesh’s financial stability is under increasing strain as the state’s debt burden has climbed alarmingly close to ₹1 lakh crore. The state government has recently taken another loan of ₹200 crore, with plans to borrow an additional ₹300 crore in the coming months. Repayment for the current loan is set to begin on October 31, adding further pressure to the already stretched state finances.
As per the data, the state has borrowed nearly ₹29,000 crore in the last couple of years, but only ₹8,693 crore was used for developmental activities. The remaining ₹20,000 crore went toward repaying earlier loans and interest, highlighting a worrying cycle where new loans are taken primarily to service old debt rather than finance growth. Fiscal observers note that this pattern reflects an unsustainable financial structure — one that risks trapping the state in a cycle of perpetual borrowing.
The 2024–25 state budget pegged total expenditure at ₹58,443.61 crore, with a fiscal deficit of ₹10,783.87 crore. However, actual borrowings were almost three times that figure, raising questions about transparency, fiscal discipline, and the credibility of the government’s financial management.
According to research and recent audit findings, Himachal Pradesh’s debt-to-GSDP ratio has surged from around 39 percent in 2019–20 to nearly 44 percent in 2023–24. The Comptroller and Auditor General (CAG) has repeatedly warned that nearly three-fourths of the state’s revenue expenditure goes toward committed liabilities such as salaries, pensions, and interest payments, leaving little fiscal space for capital investments. Experts fear that such a skewed expenditure structure could choke the state’s development prospects in the coming years.
This growing debt has also reshaped the employment opportunities in Himachal. Despite being the state’s largest employer, the government has reduced permanent employment and turned increasingly to outsourcing and contractual hiring. The number of permanent employees has declined from over 1.89 lakh in 2010 to 1.85 lakh today, while outsourced employees have risen to over 42,000. Many of these workers earn less than ₹10,000 per month, reflecting the government’s growing reliance on low-wage employment arrangements to offset its fiscal stress.
The financial strain has forced the government to increase revenue through higher taxes, service fees, and resource mobilisation, further burdening ordinary citizens. At the same time, critical areas such as disaster relief, pensions, and ration distribution have faced delays. The gap between the government’s promises and its fiscal capacity is becoming increasingly visible.
Fiscal experts have cautioned that borrowing to repay previous loans erodes the state’s financial autonomy and pushes future generations into deeper debt. They argue that without decisive corrective measures—such as broadening the state’s tax base, curbing wasteful expenditure, and prioritising asset-creating investments—Himachal could find itself in a prolonged fiscal crisis.
Opposition leaders have also accused the government of financial mismanagement, alleging that its debt-driven governance model has endangered both economic stability and employment opportunities. They argue that the government’s growing dependence on loans contradicts its claims of fiscal prudence and efficient administration.
The state’s debt journey — from ₹15,830 crore in 2010 to nearly ₹1 lakh crore today — tells a stark story of growing liabilities and shrinking fiscal space. While Himachal’s scenic hills continue to attract tourists, its financial terrain has become increasingly fragile. If the government continues on this path of “borrowing to repay borrowing,” the consequences for the state’s economy, employment, and future development could be severe.
