Himachal Pradesh to procure loan via sale of govt securities worth Rs 800 Crores.

The Himachal Pradesh government has decided to secure a loan by selling government securities worth Rs 800 crores, along with utilising the proceeds towards development programmes. An auction in this regard would be held by the Reserve Bank of India (RBI) at Mumbai on June 03^rd., and the successful bidder would have to make the payment by June 04^th., as per a specific notification issued by the state government.

The tenure of the loan commencing on June 04, 2025 would be of 20 years, ending on June 04, 2045.

The borrowings of the state government have already crossed Rs 1.00 lakh’s crores.

Several economic experts from the state have affirmed that this fiscal deficit had been building up for years. Both Congress and BJP governments have continued subsidies and welfare schemes under public pressure, leading to the current situation. According to recent data, Himachal Pradesh’s debt has surged from Rs 47,906 crore in 2018 to Rs 76,651 crore in 2023, and by 2024, it had climbed to Rs 86,589 crore.

According to the experts, the debt situation was always there, but different governments managed it differently. Now, with the previous burden, and present financial mismanagement, the state has reached the brink of crisis. The situation stems from years of rising expenditure on freebies, welfare schemes, as well as the rising salaries, pensions, and subsidies. As revenue sources remain limited; the state has become increasingly dependent on borrowings to sustain these commitments. A major portion of the state’s budget is consumed by fixed expenses. Of the total annual budget of nearly 67 per cent is allocated solely to salaries, pensions, and interest payments.

But during FY: 2025-2026, situations have aggravated for Himachal government, as the Revenue Deficit Grants (RDG) have been reduced from Rs. 6,258 crores in 2024-25 to Rs. 3,257 crores in 2025-2026 and the Goods and Services Tax (GST) compensation had already ended in June 2022.

The committed liability of the government on payment of salary and DA to employees and the pensioners was about Rs 30,000 crore per annum.

It is mention worthy, Himachal Pradesh was granted statehood in 1971, it received special category status, allowing it to rely heavily on central funds. Given its small population and limited resources, along with challenging geo-climatic conditions, economic activities remained restricted. For two decades, central funding covered most of the state’s financial needs, while, no major attention was given to revenue generation. This changed with the Ninth Finance Commission in 1987, which aimed to reduce states’ revenue deficits and altered the funding model for special category states. As a result, the state saw a sharp decline in central funds. Even after the shift, high expenditures continued through borrowings.

As presented in this state budget, In 2025-26, Himachal Pradesh is estimated to spend Rs 35,222 crore on committed expenditure, which is 83% of its estimated revenue receipts. This comprises spending on salaries (39% of revenue receipts), pension (28%), and interest payments (16%).

Team Maverick