Himachal Government to raise Rs 500 cr loan for development

Pratibha Chauhan

Shimla, August 31

The state government will raise a loan of Rs 500 crore to meet its developmental needs, especially in view of devastation caused by heavy monsoonal rain in the past two months. Principal Secretary (Finance) Maneesh Garg issued a notification in this regard here today.

“The consent of the Central Government has been obtained for the floatation of the loan, as required under Article 293(3) of the Constitution of India,” the order read.

Repayable in 15 yrs

• The state government has obtained the consent of the Central Government for Rs 500 crore loan
• The loan will be for 15 years and repayable by September 6, 2038
• The government has a loan limit of Rs 4,200 crore till December 2023 and it has already raised Rs 2,000 crore

Chief Minister Sukhvinder Singh Sukhu has often admitted that Himachal is facing a severe resource crunch and the debt burden has crossed Rs 75,000 crore. The hill state has been expecting the Central Government to come to its rescue in this hour of crisis when torrential rain has destroyed public and private property worth Rs 10,000 crore.

The government has a loan limit of Rs 4,200 crore till December 2023 and it has already raised Rs 2,000 crore. The state has received a special Central assistance of over Rs 800 crore and grants in two installments under the State Disaster Relief Fund (SDRF) but now it needs more money for development. “The collections from the GST, VAT and excise have fallen in this trimester due to torrential rain, so the government is left with no option but to raise loan,” admitted an official.

As per the terms and conditions of the loan, the cut-off yield determined at the auction will be the coupon rate per cent per annum on the stock sold. The interest will be paid on March 6 and September 6 and the loan will for a 15-year tenure, to be repaid by September 6, 2038.

Almost 60 per cent of the annual Budget is used to foot the salary and pension bill of over 2.50 lakh government employees and more than three lakh pensioners. Besides, a major component of the Budget goes towards loan repayment and interest payment, leaving barely Rs 40 in every Rs 100 for development works.

Both Congress and BJP have been trading charges over pushing the state in a debt trap due to fiscal mismanagement.

Sukhu has tried to generate additional resources by imposing a water cess on 175 hydroelectric power projects. Some power producers have challenged the government decision in court. The government is hoping to generate additional Rs 2,000 crore after it slashed the water cess rates. Besides Himachal, Uttarakhand, Jammu and Kashmir and Sikkim have also imposed a water cess on hydropower generation.