Himachal’s fiscal deficit up nearly 3 times in five years

The report of the Indian Audit and Accounts Department that was tabled in the House today hints at the grim financial state of Himachal.

It states that the gap between the total expenditure and the total non-debt receipts of the state has resulted in the fiscal deficit increasing to Rs 12,380 crore — 6.34 per cent of the Gross State Domestic Product (GSDP) — in 2022-23 from Rs 3,512 crore — 2.37 per cent of the GSDP — in 2018-19.

The revenue receipts of the state grew at just 2.09 per cent. The percentage of the revenue receipts over the GSDP decreased from 21.17 in 2021-22 to 19.49 in 2022-23.

The total expenditure of the state increased from Rs 42,806 crore in 2021 to Rs 50,565 crore in 2022-23, a jump of 18.69 per cent. A revenue surplus of Rs 1,115 crore in 2021-22 turned to a revenue deficit of Rs 6,336 crore during 2022-23 while the fiscal deficit increased from Rs 5,245 crore in 2021-22 to Rs 12,380 crore in 2022-23, the report states.

It states that the capital expenditure during 2022-23 was just 26.95 per cent of the total borrowing of the state. Thus, the borrowed funds were used mainly for meeting current consumption and repayment of borrowings instead of capital creation for development purposes.

The GSDP grew at an average of 7.26 per cent from Rs 1,48,383 crore in 2018-19 to Rs 1,95,405 crore in 2023. The Budget outlay of the state grew at an average of 10.97 per cent from Rs 46,984 crore in 2018-19 to Rs 67,733 crore in 2022-23. The continuous mismatch between receipts and expenditure indicates rising fiscal stress, the report states.

The committed expenditure of the state, including interest payments, salaries and pensions, constituted 64 to 70 per cent of the revenue expenditure between 2018-19 and 2022-23. The inflexible expenditure of the state increased from Rs 1,607 crore in 2021-22 to Rs 2,020 crore in 2022-23, registering an increase of 25.70 per cent. Together, the committed and inflexible expenditure in 2022-23 was Rs 31,983 crore — 71.99 per cent of the revenue expenditure — which leaves lesser flexibility for priority sectors and capital expenditure, the report states.

The report states the subsidy burden of the state increased from Rs 1,282 crore in 2018-19 to Rs 1,973 crore in 2022-23.