The cash-strapped Himachal Pradesh government will raise an additional loan of Rs 700 crore to meet its development needs, pushing its total borrowings in the current financial year (2026-27) to Rs 2,800 crore.
Loan details and tenure
The Finance Department on Friday issued a notification for raising the Rs 700-crore loan after obtaining mandatory consent from the Central Government under Article 293(3) of the Constitution. The loan has a tenure of 13 years and is scheduled to mature on July 8, 2039.
Previous borrowings in FY27
Earlier, the state had raised loans of Rs 900 crore in April, Rs 500 crore in May, and two more loans of Rs 400 crore and Rs 300 crore in June. The Rs 500-crore loan raised on May 8 carries an interest rate of 7.81 per cent and is repayable in 2036.
With the latest borrowing, the state’s total loan raised during the current financial year has reached Rs 2,800 crore.
Financial crunch and Centre's role
The Congress government has been grappling with an acute financial crunch, largely due to the discontinuation of the Revenue Deficit Grant (RDG) by the Centre. According to officials, the RDG had earlier provided the state with around Rs 8,000-10,000 crore annually. The Centre has also capped Himachal’s borrowing limit and restricted financial assistance under externally aided projects.
Fiscal pressure and debt burden
The state’s fiscal position remains under severe pressure, with its outstanding debt standing at around Rs 1.04 lakh crore. Committed liabilities — including salaries, pensions, interest payments, debt servicing and grants to autonomous bodies — consume nearly Rs 80 out of every Rs 100 spent by the government, leaving only about Rs 20 for development works. This highlights the limited fiscal space available for capital expenditure and infrastructure development.
