Himachal to raise Rs 300 cr loan by selling govt securities for 15 years for development works

“The order was issued after obtaining the central government’s permission to auction securities through the RBI for a 15-year term. This term will commence on November 19 this year. The coupon rate will be determined based on the cut-off yield at the auction, with interest payable semi-annually on May 19 and November 19 each year,” a senior finance department officer said.

In August 2025, the state government had sold government stocks to raise two separate loans, amounting to Rs 1,000 crore, through the RBI to carry out developmental projects.

As per the order, the auction, scheduled for November 18, 2025, will be conducted on the RBI’s E-Kuber electronic platform. “Up to 10 per cent of the notified amount will be reserved for non-competitive bidders, with an upper cap of 1 per cent per bid, as per the revised guidelines,” the order reads.

Himachal Pradesh continues to grapple with severe fiscal stress marked by rising debt, limited revenue generation and a heavy salary-pension burden. Himachal’s debt is projected to reach Rs 1.03 lakh crore in 2025-26, equivalent to 40.5 per cent of the state’s GSDP, marginally lower than the 40.8 per cent in 2024-25. The reduction in capital expenditure and a minuscule increase in the budget size by mere Rs 71 crore over last year clearly reflects the fiscal stress the state is facing. The total fiscal deficit in 2025-26 is expected to be Rs 10,338 crore, which is 4.04 per cent of the SGDP.

Over the past year, the state has increasingly relied on market borrowings to bridge its fiscal gaps. The latest move to raise Rs 300 crore underscores the government’s dependence on secured debt instruments to maintain liquidity and fund ongoing development commitments.

The Himachal Pradesh Government Stock will carry a 15-year tenure, commencing on November 19, and will mature for repayment on November 19, 2040.

The notification further states that these securities will qualify as Statutory Liquidity Ratio (SLR) investments for banks under the Banking Regulation Act, 1949, and will also be eligible for ready forward (repo) transactions.

Chief Minister Sukhvinder Singh Sukhu has been blaming the previous BJP government in the state and the incumbent central government for the poor financial condition of Himachal.

According to the CM, reducing the revenue deficit grant (RDG) by the central government is the biggest cause for concern for the state, which will reduce to Rs 3,257 crore in 2025-26 from Rs 6,258 crore last year.

In September, the Controller and Auditor General (CAG) in its 2023-24 report had highlighted that Himachal’s outstanding liabilities touched Rs 91,781 crore by March-end 2024, up from Rs 82,707 crore the previous year. The debt stock has grown at an annual average of 11 per cent over the past five years, the CAG said, warning that public debt receipts were increasingly being used to repay past borrowings rather than fund development.

The state also reverted to the Old Pension Scheme in April 2023, which the auditor flagged as a looming fiscal burden. Critics argue that the move reveals a worrying disparity between the government’s spending priorities and its stated austerity measures.