Khatakhat Model COLLAPSES: Himachal borrows another Rs. 200 Cr

Himachal Pradesh’s financial troubles continue to deepen as the state government prepares to take yet another loan, this time of ₹200 crore. The Finance Department has issued a fresh notification announcing the borrowing, to be raised through a six-year term loan. The auction for the amount is scheduled for October 28, with funds expected to reach the state treasury by October 29. The loan will mature in October 2031.

Borrowing Spree Amid Growing Debt

This is the fourth major loan taken by the Sukhwinder Singh Sukhu-led Congress government in less than six months. The state had earlier borrowed ₹1,500 crore in August, ₹1,000 crore in July, and ₹800 crore in May. With this new borrowing, Himachal’s debt burden will rise to nearly ₹99,000 crore, inching dangerously close to the ₹1 lakh crore mark.

Despite the growing liabilities, the government recently announced a 3% Dearness Allowance (DA) hike for employees and released arrears for pensioners of the Himachal Road Transport Corporation (HRTC) ahead of Diwali. The administration maintains that the latest loan will fund ongoing development projects.

However, state finances tell a different story. A large portion of Himachal’s budget is consumed by salaries and pensions, with monthly payouts crossing ₹2,000 crore, around ₹1,200 crore for salaries and ₹800 crore for pensions.

The Comptroller and Auditor General (CAG) has already flagged the deteriorating fiscal health of the state, warning that Himachal is slipping into a debt trap. The report highlights that the government has been borrowing not only to fund projects but also to repay previous loans taken between 2019 and 2024, a pattern that points to debt servicing through debt.

The return to the Old Pension Scheme (OPS) is expected to add further pressure to the exchequer in the coming years. Experts caution that without structural reforms and tighter spending controls, Himachal’s financial situation may worsen, reducing the state’s ability to invest in infrastructure and welfare programs.

For now, the government insists that borrowing is a temporary measure to “maintain developmental momentum.” But with recurring loans, mounting interest payments, and shrinking revenue, Himachal’s finances appear to be running on borrowed time.