Himachal Pradesh Debt Nears ₹1 Lakh Crore, Sukhu Govt Admits Heavy Dependence on Centre

-By Parakram Chand

Himachal Pradesh’s debt burden has climbed to ₹98,182 crore as of July 31, 2025. For the financial year 2025-26, the state has allocated ₹4,243.57 crore for principal repayment and ₹6,738.85 crore for interest payments.

Responding to a question from Bharmaur BJP MLA Dr. Janak Raj, Chief Minister Sukhvinder Singh Sukhu told the Assembly that the loans taken in July 2025 are being used through the budget for various development works.

Limited Resources Force Dependence on Centre

Sukhu explained that due to limited state resources, Himachal has no option but to rely on central funds to meet its expenses. Loans are being taken with a long-term strategy of 22 years so that repayment pressure is spread over time.

The CM added that the state’s dependence on the Centre increased significantly after GST came into effect on July 1, 2017, as many state-level taxes were merged into it. While the Centre compensated Himachal for GST-related revenue loss for the first five years, this stopped on July 1, 2022.

Revenue Deficit Grants Reduced Sharply

The 15th Finance Commission had initially recommended a revenue deficit grant of ₹11,431 crore for 2020-21. This amount has reduced steeply over subsequent years and now stands at just ₹3,257 crore for 2025-26.

Debt Crosses ₹28,000 Crore In Sukhu’s Tenure

The government acknowledged that in the past two and a half years, the Sukhu administration has borrowed nearly ₹28,000 crore. Officials admitted there is no alternative to taking loans to pay the salaries of state employees.

Debt repayment has become so heavy that the state is even borrowing to pay interest. The CM pointed out that in 1993, Himachal had no outstanding debt, but the borrowing trend began thereafter. By 2022, when the BJP lost power, the state’s debt had already reached ₹70,000 crore.

Himachal’s debt is now projected to cross the ₹1 lakh crore mark in the coming months.