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Sunday, May 26, 2024

Himachal Pradesh – A Tiny State With Insurmountable Debt

Himachal Pradesh’s debt has been mounting by leaps and bounds and this tiny hill State has a whopping Rs. 46,502 crore debt as per the statement of the current CM Jai Ram Thakur in the Himachal Pradesh Vidhan sabha in April 2018. This debt continues to mount by the day and is set to touch the 50,000 crore mark in the near future.. Himachal Pradesh’s debt to GDSP ratio of 38% is unhealthy and unsustainable according to the Chairman of the 15th Finance commission Mr N K Singh and well above the maximum limit of 25% prescribed by the 14th Finance commission.

CAG (Comptroller & Auditor General) has also reprimanded the earlier government for its flawed financial policy where it borrowed at the rate of 7.89 and earned only 4.10% on its lendings. The state’s position is even more precarious as the entire debt has to be returned in 7 years.

The inability & ineptitude of past government’s to create additional sources of revenue & reckless spending has led to large scale borrowings to meet the state’s financial needs .

So it was very natural and appropriate for the 6 time former CM of the state, Virbhadra Singh to raise concerns about the piling debt and caution the government against indiscreet borrowings. This was in response to the government’s decision to raise approximately 1000 crores through loans to meet its day to day expenditure and meet the salary and pension bills of its employees apart from servicing the interest on the debt.

CAG in its report tabled this year in the assembly by the current CM Jai Ram Thakur has again raised concerns about the financial illness of the state.

According to the CAG report, the per capita debt jumped by 50% from 2012-13 (when the previous Congress government took the reins) to 2016-17 (when the previous government relinquished office). The per capita debt rose from Rs. 43,726/-  to 65,444/-  during this period. The state’s debt escalated to a whopping Rs. 47000 crores in 2017 from Rs. 22000 crores in 2012 .

Thus the state’s debt more than doubled in the 5 years when the previous dispensation was at the helm. Had the previous government acted with financial wisdom and shown some financial prudence the state’s health would not have been in the ICU.

The state’s financial liabilities which were 176% of the  state’s revenue  in 2016 (as per the CAG’s report in 2017) are now almost 200% of the state’s receipts which is alarming.

Very little was done to augment the rich tourism potential of the state which could have turned into a money spinner for a beautiful state like Himachal Pradesh. Instead the tourism sector is languishing because of lack of infrastructure & connectivity. The state does not figure in the first 15 States of the country as a tourist destination for the domestic tourist let alone the international tourist inspite of its breathtaking views and sights.

No effort has been made to tap into the vast, varied and virgin tourist destinations that exist in the state and create basic infrastructure facilities. Existing tourist places are in perpetual negligence. Thus a place like Khajjiar which is called the Switzerland of Bharat because of its salubrious climes and thick forest cover has not been restored to its original glory. The lake in the middle of the green glade has become a swamp and there has been no effort by any government to cleanse it and make it a travelers’ paradise.

In the current scenario most of the state’s borrowings are going in repayment of interest on previous loans apart from paying the ever mounting salary & pension bill . This leaves very little funds for development work pushing the State in quagmire. The CAG report of 2016 – 17 had expressed deep concern that Himachal Pradesh will be in a debt trap by 2018 -19.  The prophecy seems to be holding true as the current government has no option but to resort to borrowings to meet its current expenses and repay previous loans which is a classic example of a debt trap.

However, the onus is on the present government to adopt austerity measures and curb unnecessary expenditure  as the previous CM rightly advised the present incumbent but failed to practice himself.

More importantly the state needs to create and generate additional resources of revenue so that it does not have to go with a begging bowl all the time. Just like charity begins at home austerity measures should be self imposed by the government & all wasteful expenditure like purchase of swanky cars for ministers (every-time the government changes) should be banned for all times to come.

Moreover the ministers & MLAs should not misuse the powers bestowed upon them by the general public by bringing bills in the assembly for 200% increase in their salaries and getting them passed unanimously without a whimper.

Unfortunately indiscreet borrowings and wasteful expenditure has ruined the financial health of the state beyond repair and imposed a heavy debt on every individual. Unless some proactive measures are adopted by the government to generate additional sources of revenue the future holds a grim picture for the state.

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Aman Gupta
Aman Gupta
Political Editor, Samast Bharat magazine


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