CAG flags mounting debt on Himachal Pradesh, fiscal imbalance, non-compliance with key norms

As per the auditors, the state has breached its annual borrowing limit. Against the prescribed loan limit of Rs 6,342 crore in 2023-24, the government borrowed Rs 9,043 crore. Alarmingly, most borrowings were utilized to repay existing loans. In 2019, 52.99% of public debt was spent on loan repayments, which jumped to 74.11% by 2024, indicating a debt trap scenario.

The report also highlighted how the state’s revenue expenditure has increased significantly under five components including interest payment (Rs 819.73 crore) and pension and other retirement benefits (Rs 771.98 crore). The revenue expenditure on interest payment was Rs 4,828.64 crore in 2022-23, and rose to Rs 5,648.377 crore in 2023-24. Similarly, the total revenue expenditure on pension and other retirement benefits was Rs 9,283.87 crore in 2022-23 and shot up to Rs 10,055.85 crore in 2023-24. Other three components wherein the expenditure was increased included Relief of Account of Natural Calamities (Rs 597.64 crore); Social Security & Welfare (Rs 193.02 crore) and Road Transport (Rs 1884.30 crore).

The CAG also reported significant decrease in seven components including rural employment (down by Rs 105.67 crore); Medical and Public Health ( down Rs 105.76 crore); Family Welfare (down Rs 149.99 crore); Other Rural Development Programme (down 535.19 crore); General Education (down Rs 510.27 crore); Crop Husbandry (Rs 215.56 crore) and Food Storage and Warehousing (down Rs 147 crore) in 2023-24 compared to previous financial year (2022-23).

The CAG also pointed out the non-utilization of the entire budget of Rs 31.85 crore reserved for six schemes in 2023-25. The schemes were Rajiv Gandhi Day Boarding School (Rs 9.74 crore); PM Young Achiever Scholarship award scheme for Vibrant India for OBC and Other Post Matric (Rs 66 lakh); Srinivasa Ramanujan Student Digital Yojna (Rs 16.45 crore); Kalpana Chawla Chatravriti Yojna (Rs 2.47 crore); Khel se Swasthya Yojna (Rs 1.82 crore) and Mukhya Mantri Gyandeep Yojna (Rs 71 lakh).

The report that state government’s notification reverting to the Old Pension Scheme (OPS) makes for imminent financial burden in coming years and it needs to be reckoned with while assessing debt sustainability of the state. “Increase of Rs 771.98 crore under ‘Pensions and Other Retirement Benefits’, was mainly due to increase of Rs 1,182.70 crore in ‘Superannuation and Retirement Allowances’, Rs 235.13 crore in ‘Commuted Value of Pensions’, Rs 244.63 crore in ‘Family Pensions’, counterbalanced by decrease of Rs 939.50 crore in ‘Government Contribution for Defined Contribution’, as Himachal Pradesh reverted back to the Old Pension Scheme,” read the report.

The auditors further pointed out that as per the debt stabilisation analysis, the overall liability (which includes Public Debt and Public Account Liabilities) of Himachal Pradesh has grown at an average annual rate of 11.07 per cent between 2019-20 to 2023-24. The total Outstanding Debt-GSDP ratio has increased from 39.09 per cent in 2019-20 to 43.98 per cent in 2023-24. Going by the fiscal trends, the state finances are stressed.

According to the CAG, the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 mandates a fiscal deficit cap of 3.5% of GSDP, but Himachal’s deficit reached 5.43% in 2023-24, up from 3.52% in 2019-20. The state also recorded a revenue deficit of Rs 5,558.59 crore in 2023-24, despite receiving revenue deficit grants of ₹8,058 crore during the year.

Unutilized Funds and Pending Utilisation Certificates

The CAG found that the government failed to utilize Rs 1,024 crore received from the Centre, which remained idle in nodal agency accounts. Departments did not submit 2,990 utilization certificates (UCs) for Rs 2,795.23 crore under various schemes, pending since 2021-22. This indicates lack of internal control by the administrative departments and tendency on the part of the government to disburse fresh grants without ascertaining proper utilisation of earlier grants, the report said. Two autonomous bodies and 18 Public Sector Undertakings/ Corporations did not submit their final accounts for considerable periods. As a result, their financial position could not be assessed and results of investments of the government remained outside the purview of the State Legislature, it added. Further, in 15 cases of theft, misappropriation and loss of government material, departmental action was pending for long periods.

Cases of Misappropriation and Weak Internal Controls

As of March 31, 2023, there were 30 cases of misappropriation, loss, and theft involving Rs 49.56 lakh. Although 15 cases were settled in 2023-24, 15 others worth Rs 38.39 lakh remain pending, some over 15 years old. The CAG emphasized the need for timely investigations, fixing accountability, and strengthening internal controls to prevent recurrence.