Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu announced in the state assembly that he would be suspending his own salary along with those of cabinet ministers and chief parliamentary secretaries (CPS) for two months. Sukhu said, “We are trying to reduce unproductive expenditure to improve the state’s fiscal health. Hence, I want to inform the House that I am suspending mine and state ministers’ and CPS’ salary allowances for two months. I request all the MLAs to (also) do so.”
Sukhu informed the assembly that the Revenue Deficit Grant (RDG) provided by the central government to assist states in covering the gap between revenue receipts and expenditures for the fiscal year 2023-24 stands at Rs 8,058 crore. However, he pointed out that this grant has been reduced by Rs 1,800 crore to Rs 6,258 crore for the current year.
He added, “In 2025-26, the revenue deficit grant will be reduced by another Rs 3,000 crore to a mere ₹3,257 crore, which will make it even tougher for us to meet our needs.”
The financial challenges facing the state are severe, and the measures announced may prove insufficient to significantly impact the situation.
The Congress government is facing a financial crisis and the state’s mounting debt and limited revenue sources have only added to the difficulties.
The latest move comes amid protests from government employees demanding the payment of pending allowances worth crores. The protest, which began with Secretariat staff on August 17, has got support from other employees, pensioners’ associations, and unemployed youth. These employees are demanding dearness allowance arrears, which have been outstanding since January 2022, amounting to Rs 1,500 crore.
Employee unions have criticised the CM, ministers, and civil servants for their high salaries, allowances, and other spendings. They allege that the government shows empty coffers to them but spends crores on office and house renovations.
This is the first significant protest by employees against the current administration. These unions have given the government two weeks to address their demands.
Besides the dearness allowance arrears, other dues amounting to approximately Rs 10,000 crore, dating from 2016-2022, remain unpaid, according to a state finance department officer.
Sukhu also noted that the cessation of GST compensation from the Centre since June 2022 has led to an annual revenue shortfall of Rs 2,500-3,000 crore. The state’s borrowing limit has also been cut by Rs 2,000 crore due to the reinstatement of the OPS.
Last year’s monsoon caused significant damage across the state, resulting in the reported loss of over 500 lives and damage to more than 12,000 houses. The state government has been seeking a special relief package to cover an estimated loss of ₹10,000 crore.
Sukhu said that no funds were released against the Rs 9,042-crore Post-Disaster Need Assessment (PDNA) to repair roads, bridges and infrastructure destroyed during the monsoon mayhem in 2023.
In addition to the high debt burden, the potential financial impact of reinstating the Old Pension Scheme (OPS) looms large, particularly as the state awaits a refund of Rs 9,000 crore from the Centre, which had been deposited by the Himachal government into the National Pension System (NPS).
The Congress party, which took power from the BJP in Himachal Pradesh in 2022, had made several promises, including reinstating the OPS.
Reports suggest that some senior civil servants have suggested that the government reconsider its decision to reinstate the OPS, which has further angered the protesting employees.
Sukhu said at a press conference, “The state’s situation is not good, and if anyone is responsible for this, it is the previous BJP government. They had received around Rs 10,000 crore from the revenue deficit grant according to the 15th Finance Commission, and since then, this grant has been reducing.”
