Himachal faces debt crisis: CM and Ministers to forgo salaries

Himachal Pradesh is currently grappling with a severe debt crisis, and in a bold move, Chief Minister Sukhvinder Singh Sukhu has announced that he, along with his ministers and chief parliamentary secretaries, will forgo their salaries and allowances for the next two months. The state’s debt has now exceeded ₹90,000 crores, prompting the Chief Minister to urge all MLAs to voluntarily give up their salaries and allowances to help the state navigate this financial turmoil.

During the monsoon session of the Himachal Pradesh Legislative Assembly, CM Sukhu detailed the severe financial challenges the state is facing. He cited the end of GST compensation after June 2022 as a major factor in the state’s revenue shortfall, estimating an annual loss of ₹2,500 to ₹3,000 crores. Additionally, the reinstatement of the old pension scheme has further strained the state’s finances, reducing its borrowing capacity by about ₹2,000 crores.

The Chief Minister expressed concern over the reduction in the revenue deficit grant, which was ₹8,058 crores in 2023-24 but has been cut to ₹6,258 crores this year, resulting in a shortfall of ₹1,800 crores. He warned that next year’s grant could decrease by another ₹3,000 crores, bringing it down to just ₹3,257 crores. This anticipated reduction adds to the financial strain, making it more challenging for the state to manage its obligations.

CM Sukhu also highlighted the lack of financial assistance from the central government, especially after recent natural disasters. The state urgently needs ₹9,042 crores for post-disaster recovery, but these funds have not yet been provided. Additionally, Himachal Pradesh is still awaiting approximately ₹9,200 crores from the Pension Fund Regulatory and Development Authority under the National Pension System. The state’s debt burden includes ₹9,000 crores in employee liabilities, further complicating its fiscal situation.

However, the Chief Minister’s call for salary sacrifices has faced criticism. Opposition leader Jairam Thakur questioned the sincerity of the move, suggesting it might be more about delaying payments rather than waiving them altogether. Thakur argued that a more effective approach would be to reduce wasteful expenditures by cutting down on the number of Chief Parliamentary Secretaries, cabinet ranks, and corporation boards. He accused the Congress government of mismanaging the state’s finances, thereby worsening the economic situation.