Govt raises Rs 900-crore loan for development, first in 2025-26

The Himachal Government has raised a loan of Rs 900 crore in new financial year 2025-26 to meet its development needs. The Finance Department had yesterday issued the notification for raising the loan, the first in this financial year, which would be repaid after 10 years by April 4, 2035.

Advertisement

The government has cited the objective of using the amount for its development programme for raising the loan. It had sought the consent of the Central Government before applying for the loan, as required under Article 293(3) of the Constitution. Besides requiring money for development, the biggest committed liability of the state government is the bill of salaries and pension of its employees.

The government in 2024-25 had raised loans to the tune of Rs 29,046 crore. Chief Minister Sukhvinder Singh Sukhu had stated that of Rs 29,046 crore, only Rs 8,693 crore was spent on development and the rest of the money went towards the repayment of the past debt and interest component on the loans raised by the previous BJP government. The annual financial liability of the salaries and pension of serving and retired government employees works out to be about Rs 30,000 crore.

The current financial year is likely to be tough for the state government, as the revenue deficit grant (RDG) will come down to Rs 3,257 crore from Rs 6,258 crore in 2024-25. The Goods and Services Tax (GST) compensation had ended in June 2022, so there was no hope of additional revenue.

The cash-strapped Himachal Government is facing a precarious financial situation with very few sources for resource generation. The Chief Minister, while presenting the Budget for 2025-26, had pointed out that out of every Rs 100, only Rs 24 would be left for development, as Rs 25 would be spent on the payment of salaries, Rs 20 on pension, Rs 12 on interest payment, Rs 10 on debt payment and Rs 9 on grants to autonomous bodies.

The government is still awaiting the release of Rs 9,000 crore of Post Disaster Need Assessment (PDNA) funds for the damage suffered to roads, bridges and other infrastructure during the devastating monsoons in 2023. The Chief Minister had met Union Home Minister Amit Shah last month and sought the release of money.