Himachal raises Rs 200-crore loan amid mounting fiscal strain

The cash-strapped Himachal Pradesh government has raised a loan of Rs 200 crore to meet its development requirements, according to a notification issued by the Finance Department on Friday. The loan, taken for a period of six years, is scheduled for repayment by October 29, 2031. The borrowing has received the Centre’s consent, as mandated under Article 293(3) of the Constitution.

With this borrowing, the state now has only about Rs 300 crore of headroom left to raise loans until December this year, as the Central Government has imposed a ceiling on fresh loans. The cap has further tightened the state’s already precarious financial situation.

Himachal’s biggest financial burden remains its annual salary and pension bill of nearly Rs 30,000 crore, catering to over 2.25 lakh employees and pensioners. In the last financial year (2024-25), the government had raised loans worth Rs 29,046 crore. Chief Minister Sukhvinder Singh Sukhu had revealed that only Rs 8,693 crore of this amount was spent on development works, while the rest was utilised for repaying past loans and interest accumulated under the previous BJP regime.

The current fiscal year has been particularly challenging, with the Centre’s Revenue Deficit Grant (RDG) sharply reduced to Rs 3,257 crore from Rs 6,258 crore in the previous year. The discontinuation of GST compensation since June 2022 has further squeezed the state’s finances, leaving few avenues for resource mobilisation.

Faced with mounting liabilities and limited borrowing scope, the state government continues to struggle to sustain its developmental commitments while managing its debt burden.