The reduction of the borrowing limit of the Himachal Pradesh government by Rs 5500 crore by the Central government is going to further impact the economic situation of the state. The cash strapped state government is already reeling under severe economic stress and finding it difficult to meet its routine expenses.
The decision being termed as political bias of Narendra Modi government has evoked sharp reaction from the opposition parties as three states where cap on borrowing has been put by the Central government i.e. Himachal, Punjab and Kerala are ruled by the opposition parties.
While the Central government has cited several reasons for putting a cap on borrowing, however, restoration of the Old Pension Scheme (OPS) by Himachal Pradesh and Punjab governments for state government employees has been the main reason for it.
Chief Minister Sukhinder Singh Sukhu said, “The state government’s decision to restore OPS for the government employees has led to a deduction of Rs. 1,779 crore from the borrowing ceiling for the financial year 2022-23 and the limit of open market borrowing has been reduced by around Rs. 5,500 Crore; the state will be eligible upto Rs. 2,944 crore from the Union government for its proposal.”
He said,” The Union Government has imposed a ceiling on new proposals for external assistance through external aided agencies from Himachal Pradesh and the restriction will be in place for three years, from 2023-24 to 2025-26.”
The financial planners of the Central government have been arguing that the state would not be contributing funds to Pension Fund Regulatory and Development Fund (PFRDA) any more after shift from NPS to OPS; the borrowing limit of the state is being reduced.
“Though the state government has been laying emphasis on resource mobilization to reduce its financial dependence on the Central government by generating additional revenue, the financial situation in the state is likely to remain stressed after an increase in its liability to pay OPS feel”, feel economic experts .