Govt raises Rs 500 cr advance loan to pay salaries, pension for Dec

The state government has raised an advance loan of Rs 500 crore to pay the salaries and pension for December to serving and retired employees. The Finance Department has issued a notification in this regard and the loan will be taken for a period of 15 years. The money will be deposited in the government exchequer tomorrow. Though the state government has exhausted its loan limit of Rs 6,200 crore, there is a provision to avail of advance loan for the next trimester beginning January 2025.

There is a limit of Rs 6,200 crore on loan raising by the state government from April 1 to December 31, 2024. Besides exhausting the loan limit for the current year, the government has also applied for a loan in the last trimester of 2024-25, which is still awaited.

On an average, Himachal has a loan limit of about Rs 8,000 crore in a financial year but the government barely manages to meet its committed liabilities with this amount. Another handicap that the government is now facing is that it cannot raise additional Rs 1,500 crore as loan on the New Pension Scheme (NPS) contributions after it was restored in the state.

The financial year 2025-26 can prove to be even tougher for Himachal, as the Revenue Deficit Grant (RDG) of about Rs 6,258 crore received from the Central Government this year will reduce to Rs 3,257 crore. With an annual budget of around Rs 58,000 crore, the state government has to pay Rs 2,000 crore per month to meet its committed liabilities of salaries and pension to the serving and retired employees. Besides, about Rs 4,000 crore is spent on paying salaries to the employees of various boards and corporations. As such, over Rs 28,000 crore of the total budget of Rs 58,000 crore goes in meeting the salary and pension liabilities.

The financial health of the state continues to remain grim and it is totally dependent on the Central Government for help. The discontinuation of the Goods and Sales Tax (GST) compensation has also added to the woes of Himachal. With very limited revenue generation resources, the state is dependent on loans and grants from the Centre to meet its requirements.

The debt burden of the state has already crossed Rs 85,000 crore and both Congress and BJP remain engaged in a slugfest, blaming each other for the financial crisis.

Exhausted loan limit of Rs 6,200 cr

• The loan money will be deposited in the government exchequer on Wednesday
• Though the state government has exhausted its loan limit of Rs 6,200 crore, there is a provision to avail of advance loan for the next trimester beginning January 2025
• The financial year 2025-26 can prove to be even tougher for Himachal, as the Revenue Deficit Grant (RDG) of about Rs 6,258 crore received from the Central Government this year will reduce to Rs 3,257 crore