Challenges Before New Government
(cover story)
A new government will be formed in Himachal after counting of votes for assembly elections is held on December 18. Immediately after taking over the reins of this hilly state, the new government will have to face challenges at various fronts. Having meager financial resources, this hilly state has accrued a debt liability of Rs. 45000 crore. Both the political parties, the Congress and BJP, have promised many things in their election manifesto and vision document. The new government, whichever party forms, will face a Herculean task to undertake financial management while implementing developmental schemes. The new government will also have to work to resolve Himachal’s pending issues. There are various other challenges staring at the new government like share in BBMB projects, generating employment opportunities for nine lakh youths, face the additional burden of implementation of 7th Pay Commission recommendation. The state government will have to curb its wasteful expenditure besides generating additional financial resources to meet the challenges.
Challenges On Economic Front
* Himachal surviving on debt
* Debt ceiling of Rs. 3400 crore
* Utilised Rs. 3200 crore debt
* CAG has already warned
* Burden of 7th Pay Commission
Himachal’s Financial Position
Himachal’s Revenue: Rs 7847 Crore
Salary Budget: Rs 9630 Crore
Pension : Rs 4950 Crore
Debt Liability : Rs 45000 Crore
Interest on Debt: Rs 3200 Crore
* Need to curb unproductive expenditure
The new government in Himachal will face the biggest challenge on economic front as it will have to take steps to bring this hilly state out of debt trap. As a result, it is likely to effect state’s progress. The problems will further increase if Punjab implements 7th Pay Commission recommendations before 2019. Warning issued by CAG are turning out to be true. The CAG report of previous financial year had warned that Himachal could fall into debt trap if there is no financial management besides curbing unproductive expenses.
Rs. 3400 Crore Debt Limit
Reserve Bank of India has fixed a limit of Rs. 3400 crore for Himachal for raising loans. According to information, this hilly state has already utilised Rs. 3200 crore out of this limit. The new government can face problems on economic front if the Centre doesn’t provide special financial package to Himachal.
Share In BBMB
The matter regarding Himachal’s share in Bhakhra Beas Management Board (BBMB) projects is also pending. The state will get a huge relief if this issue is settled at the earliest. However, it’s unlikely to happen as reflected by postures adopted by neighbouring states. The government will also face the challenge to implement recommendations of 7th Pay Commission. The government would like to appease the big number of government employees as 2019 Lok Sabha elections will be held a year after new government takes charge in this hilly state. Punjab is already working on this issue.
7th Pay Commission Recommendations
Nobody can save the new government from economic crisis if steps are not taken to curb unproductive expenditure. Knowledgeable persons feel that the state will incur addition financial burden of Rs. 3500 to Rs. 4000 crore after implementation of 7th Pay Commission recommendations. There is a pressure on Punjab to implement it after the Union Cabinet announced to implement recommendations at 23.5% in 2016. The Congress government in Punjab is preparing to implement the recommendations and Himachal will have to follow the same line.This hilly state has been following Punjab for pay and allowances.
The Centre has also announced release of arrears based on recommendation from January 1, 2016. Himachal will incur additional financial burden of nearly Rs 4000 crore, including Rs 1200 as arrears. Knowledgeable sources feel that Punjab and Himachal also follow Centre that has prepared a plan for investment a part of enhanced salary in different bonds as it would ease out financial burden, both at the Centre and states. However, Himachal will still face the challenge of releasing arrears. Though 14th Finance Commission has strengthened Himachal economically, yet it has a huge debt liability of Rs. 45000 crore. It can have impact on developmental schemes also if the Centre doesn’t enhance relaxations. Himachal faced burden of Rs. 2500 for implementing 6th Pay Commission recommendations. The state had urged 13th Finance Commission to compensate besides seeking a special package from the Centre.
Will Centre Help?
The Centre is unlikely to help this hilly state for implementing recommendations of 7th Pay Commission. The previous government had been demanding a special financial package after 6th Pay Commission in 2006 but the Centre didn’t help, though, it claims to help Himachal as special category state. Will Modi government come forward to extend help economically weak state like Himachal? Will this hilly state curb wasteful expenditure? Only time will tell.
Meager Resources
The state’s budget salary increased from Rs. 5800 crore to Rs 9630 crore after recommendations of 6th Pay Commission. Pension component has also increased from Rs 3300 crore to rs 4950 crore. Himachal’s revenue is Rs 7847 crore.
As counting for votes will be held on December 18, Himachal This Week talked to chief ministerial candidates of the BJP and Congress to know their view points on how to confront challenges before the new government:
* Himachal has become hollow on economic front as it could not avail benefit of Centre’s financial assistance. Himachal is reeling under debt liability of Rs. 50,000 crore. After coming to power, we will generate resources to take this hilly state on the path of development
-Prem Kumar Dhumal, BJP’s CM candidate
* Himachal is a developing state and difficult geographical conditions pose hurdles in its progress. We have been and will generate resources to make Himachal economically self reliant. Roads, health, education besides horticulture and agriculture will remain priority sectors after coming to power again
-Virbhadra Singh, Congress’s CM candidate
Major Challenges…
Employment For 9 Lakh Unemployed
Himachal faces a big problem of unemployment and a permanent solution could not be found even through industrialisation. The new government faces a herculean task of taking steps for employment generation, providing employment through skill development and increasing the pace of industrialisation.
New Projects
The new government will also face the challenge of running AIIMS as the Centre has also geared up for this big project in Himachal. Though all NOCs have been completed, yet there will be a challenge that there is no hurdle at state level. Buildings for medical colleges in Chamba and Sirmour are under construction, yet the government will face challenge to establish medical college in Hamirpur.
Employees Transfer Policy
No government has shown seriousness in framing a transfer policy for government employees even as different committees were constituted. The employees have been seeking a stable transfer policy but they too are divided in different factions owing allegiance to different political parties. No strong employee leader was visible during past decade who could press the government to frame a concrete transfer policy. In other words, employee leaders have been dancing to the tunes of government. Gone are the days when governments used to buckle under pressure of employees’ unity. Nearly three lakh government employees have no option but to run after MLAs and ministers for transfers. Work culture will improve, employees will not be politically victimized and those running after MLAs and ministers will also have to work if a concrete transfer policy is framed.
Self Reliance Must
Himachal is a consumer state as people don’t have enough resources as compared to people in plains though apple producers are exception. The new government also faces challenge to seek green bonus from the Centre in lieu of forest resources. In addition, it will have to mount pressure for water cess on water resources on the pattern of southern states getting royalty on coal.
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