The hill state of Himachal Pradesh is slipping into a debt trap with its total loans exceeding Rs 85000 crore and the state requiring borrowing more loans to repay the previous ones. The Himachal government is hence looking up to the 16th Finance Commission to bail out the debt-ridden state with liberal financial assistance, keeping in view the difficult situation.
The presentation by the Himachal Pradesh government before the 16th Finance Commission, which is on a visit to the state, projects Himachal Pradesh in a bad to worse financial state in the coming years with meting out salaries of government employees a big challenge.
Although the number of government employees has been on a downward trend over the last many years, the estimated expenditure on the salaries of the government employees ( 2.42 lakh) in the current financial year is Rs 14,687 crore.
The ratio of government employee-population ratio in Himachal Pradesh is very high, as most people look to government employment as a secure occupation, with the hill state not offering much in terms of opportunities in the private sector. Sixty per cent of the total expenditure on salaries of government employees in HP is incurred in education and health departments.
The 16th Finance Commission’s award period of five years beginning April 1, 2026, will see the expenditure on salaries of government employees go up to Rs 1.20 lakh crore.
While urging the Finance Commission to be liberal in grants to Himachal Pradesh given such a grim financial state, the government has pointed out that there has been a 59% increase in the expenditure on salaries of the government employees from 2017-18 to 2024-25 owing to revised pay scales, DA, annual increments and regularisation of contractual employees.
All this is even though the government has not paid off allowances to the employees and only the functional posts are being filled in the government sector.
“We have put everything straight before the Finance Commission. The state is reeling under debt and we have to take more debt to pay the previous loans. The previous BJP government is fully responsible for this financial crisis as it took huge loans in the five-year tenure,” said Chief Minister, Sukhvinder Singh Sukhu.
He said the Revenue Deficit Grant to Himachal Pradesh has reduced substantially to Rs 3000 crore this year. It was Rs 10,000 crore during the BJP regime. “This needs to be increased to help the state meet its expenditure.
The criteria for hill states should be changed when it comes to the disbursement of 41% taxes among the states. The mountain state of Himachal cannot be compared with the plain states, as the cost of construction is very high in the hills,” he said.
Sukhu said the government had moved to mobilise resources by imposing cess on water, but the same was struck down by the Court.
“We have 68% forest land in HP, which serves as lungs for North India. We can’t cut the forests also for income and have instead banned felling of trees in HP,” he said.
The Chief Minister said the state government had restored the Old Pension Scheme for the employees, which was not a populist measure. “It was done keeping in view the life expectancy and the social security.
The state must get back its contribution of Rs 9000 crore in the New Pension Scheme from the Centre,” he said.
Sukhu also talked about huge losses in last year’s natural calamity in Himachal Pradesh and said the state did not get relief from the Centre.
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