Himachal Economic Survey 2025-26 debt burden in focus as RDG exit looms
Shimla, March 20,
Himachal Pradesh’s fiscal outlook is set to face sharper pressure with the end of the Revenue Deficit Grant (RDG) from FY 2026-27, even as the State continues to carry a high debt burden, as per the Economic Survey 2025-26, tabled in the Budget session of Himachal Vidhan sabha today.
The survey says the State’s grants-in-aid are projected to fall to Rs 10,243 crore in FY 2025-26 (BE) from Rs 15,266 crore in FY 2024-25 (RE), and warns that the termination of RDG from FY 2026-27 could create an annual revenue gap of Rs 6,000 crore to Rs 10,000 crore. Pages in the survey noted that this would increase pressure on the State to rapidly raise its own revenues or curb expenditure, with possible implications for social and operational spending.
At the same time, the survey points to a heavy debt load. The debt-GSDP ratio stood at 40.74 per cent in FY 2023-24, up from 40.01 per cent in FY 2022-23, while public debt rose to Rs 65,957 crore in FY 2023-24 from Rs 58,951 crore a year earlier, it stated. Total liabilities stood at Rs 85,311 crore against a GSDP of Rs 2,09,385 crore.
GSDP is the total value of goods and services produced in a state in one year. It is the state-level equivalent of GDP and helps show the size of the economy and how large debt, deficit or revenue is in comparison to it.
As per the survey, Debt servicing is also eating into the State’s fiscal room. Interest payments are estimated at Rs 6,739 crore in FY 2025-26 (BE), up from Rs 6,265 crore in FY 2024-25 (RE) and Rs 5,648 crore in FY 2023-24. The survey says committed expenditure on salaries, pensions and interest will total Rs 33,697 crore, accounting for 57.59 per cent of total expenditure in FY 2025-26 (BE).
Even though tax revenue is expected to rise 15.28 per cent to Rs 27,907 crore, the survey makes it clear that stronger own-revenue growth is being offset by falling transfers, noted the survey. It projects a fiscal deficit of Rs 10,337.97 crore and a revenue deficit of Rs 6,390.07 crore in FY 2025-26 (BE), underlining the scale of the challenge ahead.
With RDG support ending and debt levels remaining elevated, the survey signals that Himachal Pradesh may be entering a tighter and more difficult fiscal phase.
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