Reduced borrowing limit leaves cash-strapped HP govt in limbo
SHIMLA : The chief minister (CM) Sukhvinder Singh Sukhu-led government has turned its attention to intensifying economic challenges as it struggles beyond the crutch of loans.
The development comes in the backdrop of the central government having reduced Himachal’s borrowing limit by ₹5,500 crore.
During the previous Bharatiya Janata Party (BJP) government’s tenure, Himachal had permission to take loans up to 5% of its GDP, but it has now been reduced to 3.5%. If effectively brought down the borrowing capacity from ₹14,500 crore to ₹9,000 crore annually.
Five ongoing cases in the Himachal Pradesh high court related to arrears from the new pay commission, payments to daily wage earners, pensions during contractual periods and seniority post-contract.
The court has directed the government to ensure payment to the tune of crores to employees and pensioners in the five cases. In many instances, the court has issued stern comments and warnings to the government, putting financial management officials under pressure.
A debt of ₹94,000 crore
The state government has accumulated a debt of around ₹94,000 crore, of which more than ₹10,000 crore is owed to employees. It translates to a per capita debt of ₹1.17 lakh, the second highest in the country after Arunachal Pradesh.
The previous BJP government provided all employees and pensioners with the benefits of the new pay scale in January 2016, but arrears are still pending. Before the December 2022 assembly elections, an instalment of arrears ranging from ₹30,000 to ₹40,000 was given. Many employees and pensioners, however, are still awaiting arrears exceeding ₹3-4 lakh.
Wobbly economy
The revenue deficit grant (RDG) is continuously decreasing, with Himachal receiving ₹40,624 crore in RDG under the 14th Finance Commission, which was reduced to ₹37,199 crore under the 15th. In 2021-22, Himachal received ₹10,249 crore in the RDG, which will drop to ₹3,257 crores by 2025-26. Similarly, the central government stopped the GST compensation, which used to bring in more than ₹3,000 crore annually since the introduction of GST.
The central government also stopped the matching grant Himachal received annually in place of non-performing assets (NPA). The state government used to deposit ₹1,780 crore annually with Pension Fund Regulatory and Development Authority as NPA, but since April last year, Himachal reinstated the Old Pension Scheme (OPS). Therefore, from April 2023, the state and employees’ share will not be deposited with PFRDA.