As Himachal Pradesh prepares to welcome 2025, the Sukhvinder Singh Sukhu government is staring at an even grimmer financial crisis, with concerns mounting over its ability to pay salaries and pensions on time. The situation has been steadily deteriorating, and next year could bring even more distressing challenges.
The cash-strapped government has already reached its Rs 6,200 crore borrowing limit for 2024, recently raising Rs 500 crore to cover immediate expenses. Despite this, pensions for over 2.25 lakh retired employees remain unpaid, highlighting the state’s precarious financial position.
To cover the last quarter of the current fiscal year, the government has applied for additional loans, but these funds, too, may only provide temporary relief.
Heavy monthly commitments
Himachal requires Rs 2,000 crore every month to meet its committed expenses for salaries and pensions. With limited revenue-generating sectors, the state relies heavily on central allocations. Earlier this year, delayed salaries and pensions for employees grabbed national headlines, and such delays may become more frequent if financial conditions worsen.
Burden of Old Pension Scheme
The restoration of the Old Pension Scheme (OPS), a key election promise, has added a significant burden to the exchequer. Over 1.35 lakh employees now benefit from OPS, but this move has strained resources further, as it eliminates the additional borrowing of Rs 1,500 crore that was earlier possible under the New Pension Scheme.
Dwindling central grants add to burden
The state is also set to lose a crucial revenue deficit grant from the Centre. The current grant of Rs 6,258 crore will be reduced by nearly half in 2025-26, exacerbating the financial crunch. With an annual loan ceiling of around Rs 8,000 crore, Himachal struggles to cover even its basic liabilities.
The government may face increasing pressure to delay payments, cut expenditures, or seek emergency assistance from the Centre. Development projects and welfare schemes could also take a backseat as resources are diverted to cover salaries and pensions.
