Govt staff in Congress-ruled Himachal Pradesh face delay in salary amid reports of financial crunch

The ongoing financial crisis in Himachal has led to the state government rethinking its plans of giving out doles and freebies.

To some extent, Himachal Pradesh has also been shouldering a high bill on salaries, pensions, and subsidies and its debt burden has been rising, according to reports.

This is for the first time in the history of Himachal Pradesh, that state government employees have not received their salaries by the first week of the month.

Sukhvinder Singh Sukhu, the Chief Minister of Himachal Pradesh, acknowledged the financial crisis a week ago in the House, announcing a two-month deferment of salaries for himself, other ministers, MLAs and Chief Parliamentary Secretaries (CPS).

However, the Himachal CM later claimed there was no financial struggle in the state, contradicting his own initial statement.

Emphasising the gravity of the situation, Himachal Opposition leader Jai Ram Thakur highlighted the inconsistency in the government's statements.

According to a report by Business Today, analysts had flagged concerns months ago when the Himachal CM had presented the state Budget 2024-25 in February this year and had noted that its fiscal ratios could be higher than estimated.

For 2024-25, Himachal Pradesh has targeted a fiscal deficit of 4.7 percent of Gross State Domestic Product, or GSDP (Rs 10,784 crore).

However, in the last fiscal year (2023-24), the state's fiscal deficit as per the revised estimate was pegged at 5.9 percent of the GSDP versus 4.6 percent in the Budget estimate.

In FY24, Himachal's revenue deficit was also higher at 2.6 percent of the GSDP in the revised estimate as against 2.2 percent in the Budget estimate, while for FY25, the state in Northern India has pegged the revenue deficit at 2 percent of the GSDP, as reported by Business Today.

Earlier, India Ratings and Research had said it expected the fiscal ratios of the state to be higher than budgeted in FY25, reports Business Today.

The Indian rating and research services agency had noted that the debt of Himachal Pradesh has been budgeted at 42.5 percent of GSDP in FY25, higher than the indicative debt estimate of 32.8 percent of GSDP provided by the 15th Finance Commission.

The agency also highlighted that Himachal would be mopping lesser from its own taxes which may lead to lower-than-budgeted revenue receipts in FY25.

Himachal Pradesh’s own non-tax revenue and transfers from the union government are broadly expected to be in line with the budgeted figure, Business Today reported, citing India Ratings and Research.