Himachal Pradesh Secures ₹1,000 Crore Loan to Address Fiscal Issues

Government Loan Acquisition

Shimla: The Himachal Pradesh administration has secured a new loan amounting to ₹1,000 crore to tackle its ongoing financial difficulties and support various developmental initiatives. This funding is particularly aimed at aiding the rain-affected Seraj area in the Mandi district.

A notification regarding this borrowing was officially released on July 24, 2025, by the Finance Department, marking another increase in the state's debt, which has now surpassed ₹1 lakh crore.

Details of the Loan

The loan will be obtained through the issuance of government securities with a maturity period of 22 years. The Reserve Bank of India (RBI) is set to conduct an auction for these securities on July 29, 2025, using its E-Kuber electronic platform, scheduled between 10:30 AM and 11:30 AM.

Repayment Terms

The government stock auctioned will mature on July 30, 2047, with the tenure commencing from the issuance date of July 30, 2025. The RBI will oversee the auction process from its Mumbai office.

The interest rate for this loan will not be predetermined but will be established through competitive bidding during the auction. This rate, referred to as the 'cut-off yield,' will determine the interest payments the government will incur. Successful bidders will receive payments on the same day the securities are issued.

Interest payments will occur biannually on January 30 and July 30 throughout the 22-year loan duration.

Purpose of the Loan

As per the notification signed by Principal Secretary (Finance) Devesh Kumar, the Himachal Pradesh government has obtained formal consent from the Central Government for this borrowing. The funds will be allocated to various developmental and public welfare projects throughout the state.

The administration led by Sukhvinder Singh Sukhu has emphasized that such borrowings are essential for maintaining the state's economic stability and infrastructure projects, especially following several natural disasters and revenue deficits in recent years.

However, financial analysts and opposition figures have raised alarms regarding the escalating debt, arguing that borrowing should be accompanied by stringent fiscal discipline and transparent expenditure. This latest loan adds to Himachal Pradesh's already significant debt burden, highlighting the ongoing financial challenges faced by the state.