Himachal’s tight budget: Salaries deferred, welfare shielded amid rising deficit

In a Budget that blends fiscal stress with political resolve, Sukhvinder Singh Sukhu presented a Rs 54,928 crore plan for 2026–27 , clearly signalling that Himachal Pradesh is navigating one of its toughest financial phases. In a rare move, the Budget has shrunk by Rs 3,586 crore , reflecting tightening resources rather than expansion.

The pressure stems largely from the discontinuation of the Revenue Deficit Grant (RDG) , which the state says has resulted in an annual loss of over Rs 8,000 crore . The impact is visible in the numbers, a revenue deficit of Rs 6,577 crore and a fiscal deficit of Rs 9,698 crore , with spending continuing to outpace earnings. Sukhu also pointed to global factors like rising fuel prices linked to international conflicts adding to the burden.

The Budget triggered sharp political exchanges in the Assembly , with BJP members disrupting proceedings as the Chief Minister blamed them for not supporting the state on the RDG issue. The tension underscored the seriousness of the financial situation.

In response, the government has adopted visible austerity at the top . The Chief Minister announced a 50% salary deferment for himself , along with 30% for ministers and 20% for MLAs , extending similar cuts to senior bureaucrats. However, Group C and D employees and pensioners have been fully protected, keeping the burden away from lower-income sections. Backing this move, Kuldeep Singh Pathania said the state is going through “tough times” but not a financial emergency .

Despite the strain, the government has held firm on welfare promises , including 300 units of free power for nearly one lakh poor families , Rs 1,500 monthly aid for women , and housing support for those without permanent homes. At the same time, the Budget pushes a rural and livelihood focus , with higher milk procurement prices, a minimum support price for fish , and plans for a Kisan Aayog .

Development has not been ignored. The state plans an aerocity and airport in Kangra , 50 eco-tourism sites , and Rs 500 crore to complete pending projects, while also aiming to expand forest cover through community-driven plantations.

With much of its spending tied to salaries, pensions, and interest payments, Himachal Pradesh now walks a tight fiscal rope, trying to sustain growth, manage deficits, and protect welfare, all at once.