Himachal govt takes Rs 1,000 crore fresh loan, but cites different reason this time

TNR News Network
Shimla:
The Himachal Pradesh government has raised a fresh loan of Rs 1,000 crore to manage its ongoing fiscal challenges and fund developmental projects. The government has also cited the need for funds in the rain-devastated Seraj region of Mandi district.

A formal notification regarding the borrowing was issued on July 24, 2025, by the state’s Finance Department, signalling yet another addition to the state’s growing debt, which has now crossed Rs 1 lakh crore.

The loan will be raised through the issuance of government securities with a long tenure of 22 years. The Reserve Bank of India (RBI) will conduct an auction for the securities on July 29, 2025, via its E-Kuber electronic platform, between 10.30 am and 11.30 am.

Loan to be repaid over 22 years

The auctioned government stock will mature on July 30, 2047, with the official tenure beginning from July 30, 2025, the date of issuance. The RBI will facilitate the entire auction process from its Mumbai office.

The interest rate on this loan will not be fixed in advance but will be determined through competitive bidding during the auction process. This rate, known as the “cut-off yield,” will decide how much the government pays in interest. Payments to successful bidders must be made on the same day the securities are issued.

Interest payments will be made twice a year — on January 30 and July 30 — for the duration of the 22-year loan period.

Funds aimed at supporting state development

According to the notification signed by Principal Secretary (Finance) Devesh Kumar, the Himachal Pradesh government has received formal approval from the Central Government for this borrowing. The raised capital will be directed toward various developmental and public welfare projects across the state.

The Sukhvinder Singh Sukhu-led administration has maintained that such borrowings are crucial to keep the state’s economy and infrastructure programmes on track, especially in the wake of multiple natural disasters and revenue shortfalls in recent years.

However, financial experts and opposition leaders have expressed concern over the increasing debt, pointing out that borrowing should be matched with strict fiscal discipline and transparent spending. With this move, Himachal Pradesh adds another substantial loan to its already heavy debt load, underlining the persistent fiscal strain faced by the hill state.