The financially troubled Himachal Pradesh government has raised a loan of ₹500 crore, exhausting its annual borrowing limit of ₹6,200 crore for the financial year 2024-25 (April 1 to December 31, 2024). This loan is likely to be utilized for paying pensions to retired government employees, who have yet to receive their dues, though the state’s 2.25 lakh government employees have received their salaries.
Additional Loan Request for the Final Quarter
Despite hitting its borrowing ceiling, the state government has applied for an additional loan for the final quarter of FY 2024-25. Last year, Himachal Pradesh had a borrowing limit of ₹1,700 crore for the same period.
Rs 2,000 Crore Monthly Expenditure
Himachal Pradesh faces a grave financial crisis, requiring ₹2,000 crore every month to meet its committed expenses, including salaries and pensions. The state’s limited revenue-generating avenues make it heavily reliant on central allocations.
Earlier this year, Himachal made national headlines when delays in paying salaries and pensions to employees and retirees sparked concern. Chief Minister Sukhvinder Singh Sukhu explained that the delay was an effort to save additional costs associated with raising loans to pay salaries on the first day of the month.
Impact of Old Pension Scheme Revival
The state’s fiscal challenges were further compounded by the restoration of the Old Pension Scheme (OPS) for 1.35 lakh employees, one of the key promises made by the ruling Congress in the 2022 Vidhan Sabha elections. This decision added a significant burden to the state exchequer, which previously benefited from an additional ₹1,500 crore loan tied to contributions under the New Pension Scheme (NPS).
Declining Support from the Centre
Himachal Pradesh’s financial woes are set to deepen in the coming fiscal year (2025-26). The state’s revenue deficit grant, which stood at ₹6,258 crore in the current fiscal, will be slashed by nearly 50%, leaving the government with even fewer resources to meet its liabilities.
Road Ahead for Himachal
- Rs 2,000 crore per month: Required to cover salaries and pensions.
- Reduced revenue grant: Central assistance to drop by half in FY 2025-26.
- Old Pension Scheme: Adds an ongoing burden to the exchequer.
With an average loan ceiling of ₹8,000 crore annually, Himachal Pradesh is struggling to manage its commitments, signaling a tougher road ahead for the state’s financial stability.
