'We pay salary in advance by taking loans': Himachal govt employees to get salary tomorrow, announces CM

After days of delay in releasing salary due to a financial crisis, Himachal Pradesh government employees will get their salary tomorrow (September 5), Chief Minister Sukhvinder Singh Sukhu said on Wednesday. Sukhu said that the decision to delay the salary was a "financial prudence, a financial discipline". 

The chief minister said that the public has to be told that when the government gives the salary 5 days before, it does that by taking a loan at an interest of 7.5% at an expense of Rs 3 crores monthly for those 5 days. "So, it has to be streamlined. So, our government is working towards this for financial reforms with an intent to streamline." 

Sukhu said when the Congress government came to power, there was an economic crisis and he brought it under control and rapid improvements were taking place. He said the economy has improved by 20% as compared to last year.

Himachal is facing economic crisis due to mounting debt, and rising salary and pension bills. Business Today reported that this crisis was in the making for the last some time. Analysts had flagged concerns when Sukhu had presented the state Budget 2024-25 in February this year and had noted that its fiscal ratios could be higher than estimated.

For 2024-25, the state has targeted a fiscal deficit of 4.7% of GSDP (Rs 10,784 crore). However, in 2023-24, its fiscal deficit as per the revised estimate was pegged at 5.9% of the GSDP versus 4.6% in the Budget estimate. In FY24, the state’s revenue deficit was also higher at 2.6% of the GSDP in the revised estimate as against 2.2% in the Budget estimate. For FY25, the state has pegged the revenue deficit at 2% of the GSDP.

India Ratings and Research had at the time said it expected the fiscal ratios of Himachal Pradesh to be higher than budgeted in FY25. The debt of the state has been budgeted at 42.5% of GSDP in FY25, higher than the indicative debt estimate of 32.8% of GSDP provided by the 15th Finance Commission, it had noted.

Paras Jasrai, Senior Economic Analyst, India Ratings and Research also pointed out that Himachal Pradesh is a fiscally constraint state. “The fiscal indicators have deteriorated after FY22. The revenue deficit has been budgeted at 2% of GSDP which we think is an underestimate given the optimistic assumptions regarding own revenues and GSDP growth. As a result, the fiscal deficit is also likely to be higher than the budgeted 4.8% of GSDP in FY25,” he said.