In a bold and unprecedented move, the Cabinet Sub-Committee chaired by Himachal Pradesh Deputy Chief Minister, Mukesh Agnihotri has submitted a comprehensive report urging the Union Government to waive off the state’s burgeoning debt of ₹1 lakh crore. The panel has also called for the merger or closure of loss-making public sector corporations, marking a decisive shift in the state’s fiscal thinking. While these recommendations are rooted in fiscal pragmatism, their implementation will require “Strong Political Will ”, bureaucratic resilience, and central government cooperation.

Anatomy of the Crisis: Debt Spiral in a Small State

Himachal Pradesh is grappling with a serious debt crisis. With mounting borrowings over the years, an ever-expanding salary and pension bill—nearly 60% of the state’s revenue receipts—and limited avenues for revenue augmentation, the state is teetering on the edge of a financial precipice. Recurrent natural disasters, including floods and landslides, have further strained its coffers, forcing frequent overdrafts and a dependence on central devolutions.

The panel’s demand to waive off ₹1 lakh crore is not merely symbolic—it reflects the desperate fiscal position of the state. The debt-GSDP ratio has crossed 42%, breaching fiscal responsibility limits and compromising capital expenditure (creation of assets) and development works. Economic experts opine that in view of centre’s apathy, it amounts to day dreaming to expect any relief vis-à-vis debt waiving off which can be attributed to a possible “latent game plan” to completely squeeze state’s finances to create maximum resentment amongst people and employees thereby selling a political agenda that Sukhu government is incompetent. The desperation of BJP emanates from the humiliation suffered by center after the flop show of “Operation Lotus” to destabilize Sukhu government which must be careful........

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