WHAT happens when a state has less income and more expenditure? Obviously, the state is in a perpetual financial crisis. Such is the case of Himachal Pradesh. The tiny state led by BJP nominated Chief Minister and Finance Minister Jai Ram Thakur is in deep financial crisis. The state has two main sources of revenue: GST (41% of revenue) and State Excise (21%). Finance experts don’t know how to generate more revenue. The total expenditure of the state is Rs. 44,388 crore whereas revenue is Rs. 35,024 crore. So, net deficit is Rs. 9,364 crore. There are no jobs available and Himachal Pradesh is ranked 6th among all states in unemployment. On top of all this, it is learnt that Hindu propagandists who are influenced by Arya Samaj are thinking to make Himachal a dry state. If Himachal Pradesh is declared as a dry state (liquor free state) like Gujarat as they have done ‘smoke free’ Shimla, then the whole state which survives on tourism will be in deep trouble. The source within the BJP leadership informs that it will be a big blow on Jairam Thakur’s government and no one would dare to take such a drastic step in a hilly and cold state. When one moves around on the famous Mall Road, one can feel the impact of recession after talking to shopkeepers, as their sales are down by a whopping 30 per cent. Still, the government is the major employer. It has a massive human resource load which is beyond the capacity of the state. Each month, government officials ask whether they are getting the salary on time. It is not gfiles analysis: even the budget office of the Himachal government itself admits that committed liabilities of a state typically include expenditure on payment of salaries, pensions, and interest payments.
A larger proportion of the state budget is allocated for committed expenditure thus crowding out other developmental expenditure. In 2018-19, Himachal Pradesh spent Rs. 21,668 crore on committed liabilities (49.67 per cent of revised estimates). States, on average, spend 39 per cent of their budget on committed liabilities. In 2019-20, the committed liabilities of the state are Rs. 23,837 crore. This is a 10 per cent increase from the revised estimate of 2018-19. Jairam Thakur is struggling to generate resources. He has put up an investment target of Rs. 85,000 crore across different sectors and the State Government plans to hold a Global Investors Meet at Dharamshala in November. Wait and watch.
