Govt to raise Rs 400-crore loan

Pratibha Chauhan

Tribune News Service

Shimla, April 7

With the debt trap having already touched Rs 50,000 crore, the Himachal Government has decided to raise a loan of Rs 400 crore for a term of 12 years, the first lending in the new financial year 2019-20.

Though this will be the first loan installment in the current financial year, it is only a week back that the state government had raised a loan of Rs 700 crore, which included Rs 500 crore long-term and Rs 200 crore short-term loan. Thus, the total loan raised during the financial year 2018-19 had crossed Rs 4,000 crore.

Grave financial health of the state has been a major cause for concern and challenge for the successive regimes. With there being limited revenue generation areas, the government has had to raise loans not just to meet the huge salary and pension liability of its close to 2.50 lakh employees, but also to undertake development projects.

Citing the objectives for raising the loan in the notification issued yesterday, the Finance Department pointed out that the proceeds of the state government securities will be utilised for executing various development programmes of the state government. It also mentioned that the consent of Central Government has been obtained before the floatation of this loan as required by Article 293 (3) of the Constitution of India.

The sale of Himachal Pradesh Government stock (securities) is being done for a 12-year tenure for an aggregate amount of Rs 400 crore. The tenure of the stock will commence on April 10, 2019, and the loan will be repaid at par on April 10, 2031, as per the notification. The auction will be conducted by the Reserve Bank of India in Mumbai on April 09, 2019.

The details of this year’s budget (2019-20) showed that out of every Rs 100, Rs 42.84 will go towards meeting the salary and pensionary component of the government employees. Besides, a sum of Rs 11.60 out of every Rs 100 will be spent on interest and loan repayment. This leaves a mere Rs 39.46 out of every Rs 100 for development works.

The fiscal deficit of Rs 7,352 crore clearly reflects on the poor financial health of the state which has very limited revenue generating areas. As such it is only through the engine of loans that the state government is trying to keep the economy running.

Efforts are being made to generate revenue through mining, tourism, industry and hydro-power generation but the dependence of loans has virtually become inevitable for the state government.