Mounting Fiscal Woes: Himachal Pradesh's Growing Deficit Crisis

Himachal Pradesh's fiscal deficit for 2025-26 is projected at 4.74% of the GSDP, with current year's deficit hitting Rs 12,114 crore, surpassing estimates by Rs 1,776 crore. The deficit increase is due to natural calamities, liabilities, and GST rate cuts. Experts urge boosting non-tax revenue and maximizing central schemes.

Himachal Pradesh's fiscal challenges are intensifying as the state anticipates a deficit of 4.74% of its Gross State Domestic Product (GSDP) during the 2025-26 financial year, according to a recent Fiscal Responsibility and Budget Management (FRBM) report unveiled in the state assembly.

The current fiscal deficit stands at Rs 12,114 crore, surpassing the initial budget estimates of Rs 10,337.97 crore by Rs 1,776 crore. The escalating gap has been mainly attributed to natural disasters, existing obligations, and reduced Goods and Services Tax (GST) rates.

Experts emphasize the need for strategic actions to enhance non-tax revenue and take full advantage of centrally sponsored schemes and externally aided projects. Meanwhile, the FRBM report highlights that expenditure on salary and pension, and subsidies and interest will exceed initial projections by significant amounts.

(With inputs from agencies.)