CAG report indicates highly stressed fiscal trends in Himachal

The total outstanding debt-GSDP ratio of Himachal Pradesh Government has increased from 39.09 per cent to 43.98 per cent in the last four years, indicating heavily stressed fiscal trends.

These are the findings of the report of the Comptroller and Auditor General (CAG) on state’s finances for the year 2023-24 tabled in the Vidhan Sabha today. At the end of the year 2023-24, the overall outstanding debt/liabilities of the state was Rs 95,632.96 crore.

In the last two years, the fiscal deficit (Rs 12,380 crore in 2022-23 and Rs 11,266 crore in 2023-24) remains high and crossed the Fiscal Deficit-GSDP ratio limit 3.50 per cent (2022-23) and 3.00 per cent (2023-24) set by the 15th Finance Commission.

The report mentions that the finances of the state are stressed due to the continuous mismatch between receipt and expenditure coupled with an increasing trend of liabilities like debt repayments and guarantees.

“The imminent financial burden on account of implementation of old pension scheme (OPS) from April 1, 2023, in coming years, needs to be reckoned while assessing debt sustainability of the state,” the report reads.

During the last two years, the state received post-devolution revenue deficit grant of Rs 9,377 crore in 2022-23 and Rs 8,058 crore in 2023-24. What is a matter of grave concern is that despite receiving grants, the state had a huge revenue deficit of Rs 6,336 crore in 2022-23 and Rs 5,559 crore in 2023-24. The overall liability has grown at an average annual rate of 11.07 per cent between 2019-20 and 2023-24.

The continuous mismatch between receipts and expenditure indicates rising fiscal stress. It also finds mention in the CAG report. “The gap between total expenditure and total non-debt receipt of the state results has resulted in fiscal deficit which has almost doubled to Rs 11,266 crore (5.43 per cent of the GSDP) in 2023-24 from Rs 5,597.06 crore (3.52 per cent of the GSDP) in 2019-20,” the report mentions.

Despite the requirement of submitting Utilisation Certificates (UCs) against conditional grants within a stipulated time period, 2,990 outstanding UCs for an amount of Rs 2,795.23 crore were pending on March 3, 2024.