Increasing Debt Poses Challenge To Himachal’s Economy

Hemraj Kapoor

(The writer is based at Bamani, Chamba)

The economy of Himachal Pradesh rests on the shoulders of agriculture, horticulture, micro and small industries and natural resources. Despite having tough geographical conditions, Himachal Pradesh has made an exemplary progress in almost all spheres after it came into existence. The per person income was Rs. 240 in Himachal Pradesh in 1951 that has increased to more than Rs. 1.30 lakh per person at present. Similarly the number of schools in Himachal was mere 330 in 1951. This number has jumped to 15,636 at present. The strength of colleges has increased from three in 1951 to 132 at present. Besides this road network has increased from 280 kilometre to 36,000 kilometre. Performance of Himachal in health and other areas is better than national averages. In short Himachal Pradesh has presented an ideal model for hilly states.

Economy is the basic pillar of any family, state or country. All financial and non-financial activities revolved around this basic pillar. In fact, economy reflects the real might of any country or state. But ironically, the economy of Himachal Pradesh is continuously falling deep in debt trap. The figure of debt trap has crossed the Rs. 50,000 crore mark right now. Non- planned expenditures is one of the major reason behind increasing debt while planned expenditures is decreasing. This imbalance between planned and non-planned expenditures is posing new challenges for the economy of hill state and leading towards financial destabilisation. CAG in its report has mentioned that debt of Himachal Pradesh has increased from Rs. 40,904 per person in 2011-12 to Rs. 57,642 per person in 2015-16. it means per person debt has increased by 41% in last five years. The state government will have to pay back 62% of loan within seven years. This will not be a comfortable situation for Himachal Pradesh This year the loan amount figure has reached to Rs. 2000 crore by July month. The state government took Rs. 500 crore loan in July month, Rs. 800 crore in August month and Rs. 700 crore month in September month. That takes the total loan amount to Rs. 3500 crore in the current financial year.

The state government should devise a three pronge – short-term, mid-term and long term – strategy in order to counter ever increasing debt so that besides meeting current needs, dependence on loans could also be reduced. First of all, the state government should merge loss running boards and corporations and hold over their reins to effective administrator. Besides this, the government should avoid the allurement of populist schemes and take strong decisions to strengthen economic condition of the state.  The increasing debt points towards falling economy and promotes the path of disaster of the economy.

Keep watching our YouTube Channel ‘Divya Himachal TV’. Also,  Download our Android App