Himachal raises ₹1,000 cr loan for development, paying salaries

To revive economic activity in the state, the Himachal Pradesh government has borrowed ₹1,000 crore to pay salaries of its employees and expedite development projects that have been hit by the lockdown imposed due to the covid-19 pandemic. The loan has been taken from the Reserve Bank of India.

The state has estimated a revenue loss of ₹32,000 crore over the past seven months due to the pandemic. The government has issued a notification to raise the loan.

Tourism, transport, horticulture, and other related businesses have been severely hit, with the segment incurring losses of ₹20,000 crore. With the sector contributing around 7% to the Gross State Domestic Product (GSDP), the damage needs to be undone.

Last fiscal, around 1.7 crore tourists visited the state; this fiscal, the number has dropped to a trickle at a mere 80,000 to date. If one compares it to the built-up capacity in the sector, the gravity of the situation is visible. There are 3,679 hotels with 1.03 lakh beds in the state; the tourism department has another 12,000-odd beds.

The first tranche of loan of ₹500 crore will be deposited in government treasury on October 28, with April 2029 the deadline to repay. The second loan of ₹500 crore must be repaid by April 2030.

The state government raised a loan of ₹1,120 crore in April and ₹800 crore in July this year. Overall, the state has a debt of ₹57,620 crore, even as the overall budget layout was ₹ 49,131 crore. The government had targeted 11% increase in revenue receipt this year, but covid-19 put paid to all such hopes. With 30% of the state’s budget spent on salaries and pensions to employees, new development and capital expenditure takes a hit.

An analysis of expenditure shows that the state government will be spending ₹13,099 crore on salaries, ₹7,266 crore on pension and ₹4,931 crore on repayment of loans and interest this fiscal.

The State Gross Domestic Product (SGDP), which is pegged at 1.65 lakh crore, has dipped 17% after lock-down. The CM had formed a committee to suggest measures to revive the economy. “We need to look at this epidemic differently. Steps are being taken for diversification in agriculture to encourage farmers to cultivate off-seasonal vegetables, creating better marketing for farm produce etc. Better infrastructure will be created to woo investors.” said CM Jai Ram Thakur, who also holds the finance portfolio.

The state government has taken short-term steps such as cut in salaries of the CM, speaker, ministers and MLAs. “The MLA development fund had to be suspended for some time,” Thakur said. The opposition Congress has been repeatedly targeting the state government over its poor fiscal health, and accuses it of fiscal mismanagement.