Grappling with a severe financial crunch, the Government of Himachal Pradesh raised a record ₹41,173 crore in loans during the financial year 2025–26, while also repaying ₹32,004 crore, according to the revised budget estimates. For the upcoming financial year 2026–27, the budget has made a provision to raise additional loans amounting to ₹11,965 crore.
The state’s growing debt burden, rising interest payments and the discontinuation of Revenue Deficit Grants (RDG) have emerged as major challenges for the economy, compounded further by a narrow tax base. Data from the ‘Budget in Brief’ indicates that the government’s total loan liability stood at ₹1,03,994 crore in 2025–26 and is projected to increase to ₹1,12,319 crore in 2026–27.
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The overall debt trajectory shows a consistent upward trend over recent years. The total debt stood at ₹76,681 crore in 2022–23, rose to ₹85,295 crore in 2023–24, and further increased to ₹93,625 crore in 2024–25. Meanwhile, interest payments have also been steadily rising—from ₹6,260.93 crore in 2024–25 to ₹6,693 crore in 2025–26—and are estimated to reach ₹7,271 crore in 2026–27.
Projections under the Fiscal Responsibility and Budget Management Act (FRBM) suggest that interest payments will continue to climb, touching ₹8,115 crore in 2027–28 and ₹8,865 crore in 2028–29. At the same time, subsidies are expected to decline sharply—from ₹3,205 crore in 2025–26 to ₹858.98 crore in 2026–27, followed by ₹910.52 crore in 2027–28 and ₹965.15 crore in 2028–29.
The financial situation remains concerning as nearly 80 per cent of the state’s budget is consumed by committed expenditure, including salaries, pensions, debt repayments, and interest payments. This leaves only about 20 per cent of the budget available for capital expenditure and developmental activities, limiting the government’s ability to invest in growth-oriented projects.
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