No new tax in HP despite crisis; debt crosses Rs 1 lakh crore

Amidst a severe financial crunch, Chief Minister Sukhvinder Singh Sukhu, who also holds the Finance portfolio, on Monday presented a tax-free Budget of Rs 58,514 crore for the financial year 2025-26 in the Vidhan Sabha.

The Budget, Sukhu’s third consecutive one, focuses on strengthening agriculture and allied sectors, providing social security benefits to vulnerable sections and improving quality healthcare, despite the state’s limited resources. The state’s debt burden has now crossed Rs 1 lakh crore, adding to the financial challenges.

Sukhu did not shy away from acknowledging the grim financial outlook, stating that 2025-26 could be one of the toughest years due to a continuous decline in Central assistance and a tapering revenue deficit grant (RDG). The RDG is set to reduce to Rs 3,257 crore in 2025-26 from Rs 6,258 crore last year.

In his Budget speech, the CM announced six new schemes, including home-based healthcare for the elderly, involvement of Mahila and Yuvak Mandals in forest plantation and a scheme for small shopkeepers. However, the Budget increase of just Rs 71 crore from last year’s Rs 58,444 crore is negligible and likely the lowest in the state’s history.

The state’s dire financial health, exacerbated by declining Central assistance, has significantly impacted the Budget. With the majority of revenue being spent on committed liabilities such as salaries, pensions and loan repayments, only 24 paise out of every rupee will be available for development works this year.

Sukhu announced marginal increase in MNREGA wages, daily wages and honorariums for workers in the Panchayati Raj institutions, urban local bodies and other departments. Additionally, he raised the rate of cow and buffalo milk by Rs 6 per litre and increased the MSP for wheat and maize.

“The focus of this budget is to bring the derailed economy of the state back on track. We formed the government on December 11, 2022, inheriting huge financial liabilities left behind by the previous BJP regime, including a debt burden of Rs 76,185 crore,” Sukhu said. He further revealed that Rs 6,531 crore in loans were raised in the past year to manage the financial crisis.