Cash-strapped state government to raise Rs 500-crore loan

Facing a significant financial crisis, the state government has decided to raise an additional Rs 500-crore loan, which is part of its broader borrowing limit of Rs 6,300 crore, set to be exhausted by December. The loan, which has a 15-year term and is repayable by November 13, 2029, is said to address the state’s developmental needs. However, the financial burden is heavy, particularly as the government struggles to meet its monthly liabilities of around Rs 2,000 crore for salaries and pensions.

The state’s difficulties are compounded by a steep decline in its revenue streams, particularly with the reduction in the GST allocation from the Central Government and the expected reduction in the revenue deficit grant starting next year. Additionally, the Himachal Government is waiting for the release of Rs 9,020 crore post-disaster need assessment (PDNA) aid from the Centre for the last year’s monsoon-induced disaster.

In an effort to manage the crisis, the government has even resorted to delaying salary and pension payments. However, October’s payments were released early in light of Diwali.