Himachal Pradesh's Financial Strain: A Looming Debt Crisis

The Himachal Pradesh government is battling a mounting financial crisis, having raised its highest-ever loan of Rs 41,173 crore during the fiscal year 2025-26, according to revised budget estimates. The state's debt repayment for the same period totaled Rs 32,004 crore.

Budget provisions for 2026-27 include raising an additional Rs 11,965 crore in loans, with the government's debt liability projected to rise from Rs 1,03,994 crore in 2025-26 to Rs 1,12,319 crore in 2026-27. This increase compounds existing economic challenges, especially in light of discontinued Revenue Deficit Grants (RDG) and a narrow tax base.

Interest payments are on an upward trajectory, predicted to reach Rs 8,865 crore by 2028-29, as reflected in the Fiscal Responsibility and Budget Management (FRBM). Alarmingly, 80% of the current budget is locked in committed expenditure including salaries, pensions, and debt servicing, leaving scant resources for capital projects.