BS EDIT: Himachal has lessons in what not to do

By Business StandardPublished On Sep 9, 2024

Himachal’s financial struggles

The state faces severe fiscal issues, marked by high debt and deficits, sparking political tension between the Congress and BJP

Rising debt levels

The state’s debt has surged from 37% to 42.5% of GSDP in just 3 years. It now has the second-highest per capita debt in India

Increasing deficit

Himachal's fiscal deficit rose from 4.05% of GSDP in 2021-22 to 6.4% in 2022-23, with ongoing high deficits affecting the state’s financial stability

Revenue challenges

Revenue expenditure accounts for around 90% of total spending. The state struggles with low revenue generation and high subsidy costs

Subsidy impact

The state is considering rolling back subsidies to improve finances, but this approach may not suffice without broader fiscal reforms

Need for fiscal reforms

To avoid a crisis, states must rationalise expenditure and improve fiscal management. Rising debt and deficits threaten long-term economic stability