HP to borrow money to repay loans

POOR ECONOMIC STATE The state’s own income is ₹10,000 crore which is not even enough to pay the whopping salary bill of ₹11,263 crore

SHIMLA: Himachal will soon fall into a debt trap as the budget presented in the state assembly on Thursday shows that it will borrow ₹7730.20 crore. Against this the state will run up committed liability of interest payment, loan repayment and other loans of ₹7,892 crore.

“If you see the explanatory memorandum, the government would borrow around ₹7,730 crore but it has to pay back more than that to service the existing debt,” said a senior government functionary, requesting anonymity.

The government auditor has warned that the state of falling in a debt trap.

The budget itself claims that the state will have 73.36% funds of its own, including dominating share of central transfers excluding loans.

The gap of 26.64% will be met by borrowings. Since the state’s gross domestic product (GDP) has been estimated to remain ₹1.35 lakh crore, the state can borrow just over ₹4,000 crore from the market that is 3% of GDP.

The first budget of Jai Ram Thakur-led government focused on the primary sector that includes agriculture, the state government will now have to walk on tight rope in terms of its financial position as loan is to be a major source of state’s ‘income’.

Even as the government succeeded to cover the wrinkles of resource crunch as the revenue deficit has been contained below 2% for the current fiscals and but projected to remain below 3% for the next fiscals. The fiscal deficit is also to remain 5.16% for the next fiscal.

State’s next budget will have more than 50% as central contribution, including share in taxes and central sponsored schemes grant.

State’s own income is ₹10,229.12 crore which is not even enough to pay the whopping salary bill of ₹1,1263 crore.

Against the receipts of ₹30,400 crore, the state’s revenue expenditure will be 33,567.97 crore leaving the deficit of 3,167.76 crore.