Government to raise Rs 1,500-crore loan for development

The state government is all set to take a loan of Rs 1,500 crore to meet its development needs and as a result, mere Rs 300 crore of the total loan limit will be available for the next four months this year.

The Finance Department has issued two notifications for raising loans of Rs 1,000 crore and Rs 500 crore. The Rs 10,000 crore loan will be for a 15-year term, returnable by August 28, 2040, while Rs 500 crore loan will have to be repaid in 10 years.

The consent of the Central Government has been obtained for the floatation of this loan as required under Article 293(3) of the Constitution of India.

By raising Rs 1,500 crore loan, the state government will be left with only Rs 300 crore of the total loan limit till December. The government is yet to give 3 per cent Dearness Allowance (DA) to its employees.

Chief Minister Sukhvinder Singh Sukhu has indicated that the next few months for Himachal will be financially very difficult in view of the Central Government capping the loan raising limit of the state government at Rs 6,200 crore annually. He, however, has assured people that the state government will manage its committed liabilities of salaries and pension and pay these on time. The situation will ease when the state gets grants as per the recommendations of the Sixth Finance Commission for 2026-31 from next year.

The total debt burden of the state government has already crossed Rs 1 lakh and so it will be a Herculean task for it to pay salaries and pension to its employees and pensioners. The financial burden on the government has increased after it granted the old pension scheme (OPS) benefit to its employees.

So far, 1.17 lakh employees have opted for the OPS while 1,365 employees have chosen to stay with the New Pension Scheme (NPS). Himachal has time and again urged the Central Government to return Rs 9,000 crore of the NPS contributions of the state government employees following the restoration of the OPS. The state requires a minimum of about Rs 30,000 crore every year to foot the salary and pension bill of its employees and retirees.

The state is largely dependent on tax collections from revenue, mining and excise sectors. The state government is facing a severe financial crisis as the reducing Revenue Deficit Grant (RDG) will be mere Rs 3,200 crore this year and the Central Government has capped its loan raising limit after the restoration of the OPS.