Himachal Pradesh's debt to GSDP 38 percent 'unsustainable': Fin Commission

The debt to Gross State Domestic Product (GSDP) ratio of 38 percent in Himachal Pradesh is unacceptable and unsustainable.

Chairman of 15th Finance Commission N K Singh stated this while talking to mediapersons during the second day of his three-day visit to Himachal Pradesh.

At the same time, Singh said the debt to GSDP ratio ten years ago had been worse in the state as compared to current situation. Huge progress has been made in the last ten years to bring down the ratio to 38 percent but this ratio is unacceptable and unsustainable, he added.

A lot more is required to be done to further bring down the ratio to at least further 8-10 percent by making a debt reduction plan to reduce the debt at least 1,200 crores more, he added.

It can not be done overnight but the medium-term plan should be made to achieve the fiscal deficit target.

In reply to a question, he said there is a need to formulate a mechanism and funding pattern for providing special financial assistance to Himalayan states including Himachal and northeastern states to tackle natural calamities.

An intensive study is required for that and he would send some concerned experts to these states before finalizing response mechanism and funding pattern, he added.

However, HP has made credible progress in adhering to the macroeconomic parameters, he added.

Hydroelectric potential is a major source of revenue for the state but its full potential could not be realized due to the fact that the center does not recognize hydel projects beyond a certain threshold as renewable energy projects, he added.

Earlier, Himachal Pradesh Chief Minister Jairam Thakur along with his Cabinet colleagues in his welcome remarks urged the Commission to make a realistic assessment of the revenues and provide a post-devolution revenue deficit grant as Himachal Pradesh historically has been a chronical revenue deficit state. He stated that state is incurring annual losses of around Rs 3,000 crore due to the abolition of Planning Commission.