Over Rs 8,500 Crore needed to clear employee arrears

Government admits pending liabilities in High Court affidavit: Revised pay and pension benefits stalled over 4 years
Total dues stood at Rs 16,600 crore: Rs 8,045 crore released or adjusted. Government cites 78 percent of budget consumed by salaries, pensions and gratuities.

Mahesh Pathania

Shimla. The Himachal Pradesh government needs Rs 8,555 crore to clear the long-pending arrears of revised pay scales and retirement benefits for its employees and pensioners. This figure was admitted by the government itself in an affidavit filed by the Finance Secretary before the High Court. According to the court submission, total liabilities under revised pay scales and retirement benefits reached Rs 16,600 crore. Out of this, Rs 8,045 crore has been released or adjusted, leaving a pending balance of Rs 8,555 crore.

This data was recorded in the affidavit filed by the Principal Secretary, Finance on October 14, 2025.
According to the government position noted in the High Court judgment, the liability stems from implementing revised pay scales effective January 1, 2016 and issuing revised pensions and retirement benefits via an office memorandum dated February 25, 2022. Citing weak state finances, the government opted to clear these liabilities in phased installments rather than a single lump sum.

The government reiterated its financial distress in subsequent affidavits filed on February 28 and May 15, 2026. The May 15 submission highlighted that approximately 78 percent of the budget goes toward employee salaries, pensions and gratuity. After committed expenses, such as interest payments, loan repayments and grants, a meager 20 percent of the budget remains available for development work in the 2026-27 fiscal year. The government stated that deferring dues was not a deliberate choice but a necessary measure driven by the discontinuation of the Revenue Deficit Grant, (RDG).

The affidavit also noted that Himachal Pradesh received Rs 37,199 crore in Revenue Deficit Grants during the 15th Finance Commission’s tenure (2021-22 to 2025-26). However, the 16th Finance Commission did not recommend continuing this grant for 2026-31, nor did the state receive any special grant in its place, significantly intensifying financial pressure.

As detailed in the May 15, 2026 affidavit, the government has prioritized payouts to pensioners over 70 years of age and retired Class-IV employees. An office memorandum dated April 25, 2026 directed the release of full benefits to Class-IV staff who retired between January 1, 2016 and January 31, 2022. The government framed this strategy as a phased, age and need-based priority system.

However, alongside the government’s financial arguments, the court addressed the statutory rights of workers. The High Court affirmed that rights to revised pay and retirement benefits had already accrued under relevant rules. The court questioned the policy of withholding accrued benefits for extended periods or delaying them through installments, pointing out that delays have exceeded four years and highlighting differential treatment among retirees.

The core question remains: Has the government formulated a concrete, time bound roadmap to clear the admitted balance ? Employees and pensioners now await a clear timeline on when their revised pay and retirement benefits will be fully disbursed.