Himachal Government Opts for Rs 300 Crore Borrowing Through RBI
The financially strained Himachal Pradesh government has decided to raise Rs 300 crore through the sale of government securities, marking another significant borrowing move to fund development initiatives across the mountain state.
According to an official order released by Principal Secretary (Finance) Devesh Kumar's office, the state will secure this loan with a 15-year repayment tenure, scheduled for final settlement on November 19, 2040.
Loan Details and Auction Process
The borrowing arrangement received necessary clearance from the central government, permitting the state to conduct the securities auction through the Reserve Bank of India. The 15-year term begins on November 19, 2025, with the coupon rate to be determined by the cut-off yield established during the auction process.
Interest payments will occur semi-annually on May 19 and November 19 each year, providing regular income streams for investors. The auction itself is scheduled for November 18, 2025, and will be executed through the RBI's sophisticated E-Kuber electronic platform.
In a significant provision, up to 10% of the notified amount has been reserved for non-competitive bidders, with individual bids capped at 1% as per revised guidelines, ensuring broader participation in the borrowing program.
Mounting Debt and Fiscal Challenges
This latest borrowing initiative comes against the backdrop of Himachal Pradesh's escalating financial challenges. The state's total debt is projected to reach Rs 1.03 lakh crore in 2025-26, representing approximately 40.5% of the state's Gross State Domestic Product (GSDP).
While this figure shows a marginal improvement from the 40.8% debt-to-GSDP ratio recorded in 2024-25, it still highlights the substantial fiscal pressure facing the Himalayan state. The total fiscal deficit for 2025-26 is estimated at Rs 10,338 crore, equivalent to 4.04% of the SGDP.
The state's financial strain is further evidenced by reductions in capital expenditure and a minimal budget increase of merely Rs 71 crore compared to the previous fiscal year.
Historical Context and Political Dimensions
This isn't the first time the Himachal government has turned to market borrowings to address fiscal requirements. In August 2025, the state raised two separate loans totaling Rs 1,000 crore through similar RBI-managed auctions of government stocks.
Chief Minister Sukhvinder Singh Sukhu has consistently attributed the state's financial difficulties to the previous BJP state government and the current central government. The CM has particularly highlighted the reduction in revenue deficit grant (RDG) from the central government as a major concern.
The RDG is set to decrease to Rs 3,257 crore in 2025-26 from Rs 6,258 crore in the previous year, creating additional fiscal pressure on the state administration.
According to the Controller and Auditor General's (CAG) 2023-24 report, Himachal's outstanding liabilities reached Rs 91,781 crore by March 2024, up from Rs 82,707 crore the previous year. The audit authority noted that the state's debt stock has grown at an average annual rate of 11% over the past five years.
The CAG report also raised concerns about the state's reversion to the Old Pension Scheme in April 2023, flagging it as a potential future fiscal burden. Critics argue that the government's borrowing patterns reveal a disconnect between spending priorities and announced austerity measures.
The newly issued Himachal Pradesh Government Stock will qualify as Statutory Liquidity Ratio (SLR) investments for banks under the Banking Regulation Act, 1949, and will also be eligible for ready forward (repo) transactions, enhancing their attractiveness to financial institutions.
