Himachal Pradesh Debt Hits Record Rs 41,173 Crore in FY26 Amid Rising Fiscal Pressure
Government Borrowings Surge While Debt Liability Continues Upward Trend
Shimla, March 24: The Himachal Pradesh government raised loans worth Rs 41,173 crore in the financial year 2025-26, marking its highest-ever borrowing, according to revised budget estimates. During the same period, the state repaid loans amounting to Rs 32,004 crore.For the upcoming financial year 2026-27, the budget has made a provision of Rs 11,965 crore for fresh borrowings, indicating continued reliance on debt to manage fiscal requirements.
Debt Burden Crosses Rs 1 Lakh Crore Mark
The state's total debt liability stood at Rs 1,03,994 crore in 2025-26 and is projected to rise further to Rs 1,12,319 crore in 2026-27.Budget data shows a consistent increase in debt over recent years. The total debt burden was Rs 76,681 crore in 2022-23, which rose to Rs 85,295 crore in 2023-24 and further to Rs 93,625 crore in 2024-25, reflecting a steady upward trajectory.
Interest Payments Continue to Rise
Interest payments have also seen a significant increase alongside rising debt levels. The state paid Rs 6,260.93 crore in interest in 2024-25, which increased to Rs 6,693 crore in 2025-26. This figure is estimated to reach Rs 7,271 crore in 2026-27.As per projections under the Fiscal Responsibility and Budget Management (FRBM) framework, interest payments are expected to rise further to Rs 8,115 crore in 2027-28 and Rs 8,865 crore in 2028-29.
Subsidy Reduction Planned in Coming Years
The budget outlines a sharp reduction in subsidies as part of fiscal adjustments. Subsidies are set to decline from Rs 3,205 crore in 2025-26 to Rs 858.98 crore in 2026-27. They are projected at Rs 910.52 crore in 2027-28 and Rs 965.15 crore in 2028-29.Limited Fiscal Space for Development Spending
The state's financial position is further constrained by high committed expenditure. Around 80 percent of the budget is allocated to salaries, pensions, debt repayment, interest payments, and other fixed obligations. This leaves only about 20 percent available for capital expenditure and development activities.Key Challenges: Narrow Tax Base and Loss of Revenue Deficit Grants
The government is also facing pressure from the discontinuation of Revenue Deficit Grants, along with a narrow tax base. These factors, combined with rising debt and interest liabilities, present significant challenges for the state's fiscal stability.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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