Himachal Pradesh is currently grappling with an economic crisis, with its debt burden crossing ₹1 lakh crore. The state, which was once known for its fiscal discipline and moderate economic stability, is now struggling under the weight of populist policies and financial mismanagement. The Congress government, under Chief Minister Sukhwinder Singh Sukhu, has exacerbated the situation by continuing the trend of freebies without ensuring sustainable revenue generation. While the people of the state are facing delayed pensions, increased tariffs, and a worsening financial situation, the chief minister and his close circle are seen vacationing in the Maldives, displaying a stark disconnect from the ground realities.
The crisis in Himachal Pradesh is not an overnight development. The Congress government, after coming to power, made several promises aimed at garnering public support. Among the key commitments was the restoration of the Old Pension Scheme (OPS), which was reinstated without considering its long-term financial viability. While OPS benefits retired government employees, it places an enormous burden on the state's finances, as the government must pay pensions from its revenue rather than through a self-sustaining pension fund. Given Himachal’s small revenue base and dependency on central funds, the decision to reintroduce OPS has only worsened the fiscal deficit.
Another major factor contributing to the debt crisis is the unrestrained freebie culture promoted by the Congress-led government. Promises such as free electricity, subsidies, and allowances for various sections of the population have severely impacted the state's revenue generation capacity. The government has been borrowing heavily to fulfill these commitments, pushing the state deeper into a financial abyss. Despite repeated warnings from economists and financial experts, the Sukhu government continued on this path, prioritizing short-term electoral gains over long-term economic stability.
Infrastructure projects and essential public services have also suffered due to this financial mismanagement. The state government has delayed salary payments to employees, postponed pension disbursements, and increased electricity tariffs to manage its expenses. The common people, especially the middle class and the salaried employees, are now paying the price for the government's reckless spending. Ironically, while ordinary citizens are facing financial hardships, the chief minister and his family members, along with his advisors, have been abroad for nearly a week, enjoying vacations when the state is in a severe economic crisis. This has further fueled public anger and raised questions about the government's priorities.
The financial situation in Himachal Pradesh has also been worsened by the government's failure to boost revenue streams. Tourism, which is a significant contributor to the state's economy, has been underperforming due to poor management and a lack of innovative policies. Additionally, industries have been struggling due to high taxation and bureaucratic hurdles, discouraging investment in the state. Instead of focusing on economic reforms, the government has continued to rely on loans to meet its day-to-day expenses, further pushing the state towards financial insolvency.
One of the most concerning aspects of Himachal Pradesh’s financial downfall is the lack of accountability. The government has failed to provide a clear roadmap for reducing debt and improving revenue collection. The focus remains on distributing doles rather than creating opportunities for employment and economic growth. As a result, the state remains trapped in a vicious cycle of debt and expenditure without any concrete plan for recovery.
In contrast, other states in India that have faced similar fiscal challenges have adopted corrective measures, such as rationalizing subsidies, promoting industrial investments, and enhancing revenue collection through better taxation policies. Himachal Pradesh, however, remains stuck in a policy framework that prioritizes populism over pragmatism. If corrective steps are not taken soon, the state may find itself in an even deeper crisis, struggling to meet even its basic financial obligations.
The current situation in Himachal Pradesh serves as a warning about the dangers of reckless financial policies and the unsustainable freebie culture. The Sukhu government's approach has not only failed to provide long-term benefits to the people but has also put the state on the brink of financial disaster. The need of the hour is strong economic reforms, responsible governance, and a shift away from populist measures that only serve as short-term political gains. If the government continues on its current path, Himachal Pradesh will face even more severe economic distress in the coming years, making recovery even more difficult.
By Uday India Bureau
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