Himachal Pradesh CM Sukhvinder Singh Sukhu flags financial crisis, ministers to forgo salaries for 2 months

Himachal Pradesh ran into fiscal difficulties due to high borrowings, increasing salary and pension costs, reduced central assistance, and limited revenue generation.

Promises like reinstating the Old Pension Scheme (OPS), providing Rs 1,500 to women, and free electricity have contributed to a financial strain, leaving the state with a debt of Rs 86,589 crore.

The government has implemented five election promises, including a monthly payment of Rs 1,500 to five lakh women, costing about Rs 800 crore annually.

The restoration of the Old Pension Scheme will benefit 1.36 lakh employees, adding an annual burden of Rs 1,000 crore to the state budget.

"After discussing in the cabinet, all the members of the cabinet decided that until the state sees good improvement in the coming times, we will not take any salary, nor TA, nor DA for two months," the Chief Minister was quoted as saying by India Today.

The Himachal Pradesh government spends Rs 20,639 crore annually on salaries, with pay, pensions, and interest payments consuming 46.3% of the state's total expenditure for 2023-24. The number of pensioners, currently at over 1,89,466, is expected to rise to 2,38,827 by 2030-31, increasing the annual pension burden by nearly Rs 20,000 crore.

In March, the state introduced a Rs 1,500 monthly allowance for women aged 18 to 60, costing Rs 800 crore annually and benefiting over 5 lakh women.

Additionally, the government launched an e-taxi scheme under the first phase of the Rs 680 crore Rajiv Gandhi Self-Employment Start-up Scheme.

Faced with empty coffers, the government has taken drastic measures, such as deferring ministers' salaries for two months and withdrawing power subsidies for taxpayers, limiting it to BPL, IRDP, and weaker sections, costing Rs 1,800 crore in 2023-24.

Chief Minister Sukhvinder Singh Sukhu said that the state's finances are in critical condition, with the revenue deficit grant reduced by Rs 1,800 crore for the current fiscal year.

Chief Minister Sukhu warned that the revenue deficit grant is expected to reduce to Rs 3,257 crore in 2025-26, adding another Rs 3,000 crore burden to the state.

The Centre also cut the borrowing limit from 5% to 3.5% of GDP, reducing the state's borrowing capacity from Rs 14,500 crore to Rs 9,000 crore.

Himachal Pradesh's debt stands at Rs 86,589 crore, projected to reach Rs 1 lakh crore next year, with a per capita debt of Rs 1.17 lakh—the second highest in India after Arunachal Pradesh.

"We inherited the debt left by the previous BJP government, which is responsible for pushing the state into a financial emergency. We have improved revenue receipts. The previous government collected an excise revenue of Rs 665 crore in five years, and we generated Rs 485 crore in just one year. We are working on it and are determined to improve the state's financial health," Sukhvinder Singh Sukhu was quoted as saying by India Today.

However, the BJP leader and former Chief Minister Jairam Thakur alleged that the Congress government has created unconstitutional posts and given several people Cabinet and chairman status.

Protesting the alleged Congress-induced financial crisis, the BJP MLAs led by Thakur staged a walk out from the Himachal Pradesh Assembly.

"According to the information I have received, they will not take a salary for two months. They have just deferred it since there is a financial crisis in the state. You have created chief parliamentary secretaries (CPS) which cannot be created as per the Constitution. You have given Cabinet, chairman status to many people and all facilities have been given to them. So definitely I believe this is not a solution to all the problems and they have requested all the MLAs," he said, according to India Today.