Shimla: Faced with a “tough financial position” and reduction in Revenue Deficit Grants, Himachal Pradesh Chief Minister Sukhwinder Singh Sukhu on Thursday flew to Delhi to meet Union Finance Minister Nirmala Sitharaman and apprise her about “serious challenges” on the fiscal front.
His meeting with the Finance Minister is significant as it has come in the middle of the state Assembly budget session and at a time when the Opposition has been targeting the Congress government for its “failure to manage the state’s fiscal crisis”.
The state Budget for the year 2025-26 has highlighted a grim financial position due to cuts in the grants and restrictions imposed on raising loans to tide over the crisis.
Sukhu asked the Finance Minister to review the limit imposed by the Department of Expenditure on Himachal Pradesh for availing external assistance and urged to restore the position as it has adversely affected the financial position of the state and many projects are stalled.
Sukhu also requested her to consider the funding of a reconstruction and rehabilitation proposal from HP for multilateral funding from the World Bank under a new window, which is over and above the ceiling imposed by the Finance Ministry.
The Chief Minister raised the issue of Revenue Deficit Grants. He said that the state government has taken many steps for additional resource mobilization, however, these are insufficient to meet the budgetary obligations for the financial year 2025-26. He requested to allow the state an additional borrowing of 2 percent of the GSDP for 2025-26.
He pointed out that during 2021-22, the state got a grant Rs 10,949 crore under GST. This was reduced to Rs 9,377 crore in 2022-23. It further declined to Rs 8,058 crore in 2023-24. For the year 2024-2025, the RDG has dropped to Rs 6,258 crore and in the upcoming year 2025-26, it is merely Rs 3,257 crore.
The state’s debt burden has already crossed Rs one lakh crore mark and with state’s own resources remaining stretchable, the going during the 2025-26 financial year, will be challenging.
The Chief Minister also raised the issue of the requirement of additional resources for creating infrastructure due to high cost construction due to tough topographical and weather conditions.
Sukhu had informed the Assembly, during his budget speech, that the state government had raised a loan of Rs 29,046 crore of which Rs 12,266 crore went to interest payments and Rs 8,087 crore to principal repayment, leaving only Rs 8,693 crore for development. This means 70% of our loans were spent on repayment and interest.