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Interview| Himachal’s financial crisis has been overblown: CM Sukhvinder Singh Sukhu

Sukhvinder Singh Sukhu, 60, has been in charge of Himachal Pradesh since only late 2022 but has already weathered two serious challenges, both in the past one year: A natural crisis of devastating monsoon fury was followed by a political one after the defection of six of his party MLAs in a potential threat to his government’s survival. Sukhu overcame both challenges and is now firmly in the saddle. In a wide-ranging interview with Hindustan Times at his Oakover residence in Shimla, he spoke about the state’s financial situation, recent communal strife at two places and his roadmap for the next three years. Edited excerpts:
Your government is close to completing two years. How do you look at its report card?
We have changed systems in a step toward a self-reliant Himachal Pradesh. For the past five decades, the state has had a routine budget. In our first budget, we made a break in line with the state’s past track record, current realities and future challenges. The previous BJP government had distributed ‘revri’ (doles) of ₹5,000 crore six months before the 2022 assembly elections. About 900 new institutions, including schools, colleges and hospitals, were opened but without any budget provision for the staff. That weakened the quality of education and health services. They waived water bills of all users, including that of even income tax payees and luxury hotels, and doled out free power of 125 units per household that led to free power for almost all. Subsidies were given to all industries, including the Adani group. VAT on diesel was reduced by ₹5/litre. All in all, the BJP government left behind a debt burden of ₹85,000 crore and a ₹10,000 crore liability owing to the implementation of the Sixth Pay Commission. Our first challenge was to deal with the financial crisis inherited from the so-called double-engine government. That made us bring about a policy shift through rationalisation, uniformity and reforms. For instance, we changed to open auction of liquor vends that earned us ₹450 crore in one year, while the previous government’s incremental policy got this amount of revenue in three years. In the past one year, my government has not only weathered a natural disaster but also thwarted a political crisis in the wake of the BJP’s Operation Lotus to destabilise it by engineering defection of six MLAs.
Are you satisfied with the funds provided by the Centre for the massive damage to the state due to devastating rains last year?
I had asked the Centre to declare it a national disaster and give a special relief package. Nothing of that sort was done. More than 500 lives were lost, 23,000 houses were damaged, and hundreds of roads, bridges and water schemes were devastated. But only routine grants were given. All that the Centre did was advance the December instalment of the National Disaster Relief Fund, which all states get twice a year. But the speed with which we handled relief and rehabilitation by spending ₹4,500 crore from our own resources was praised by the World Bank, NITI Aayog and even former BJP chief minister Shanta Kumar. A central team had recommended an aid of ₹10,000 crore under the Post Disaster Need Assessment (PDNA). We submitted a case for ₹9,300 crore but have not gotten a paisa so far.
There’s been a lot of debate on Himachal’s finances, particularly after it defaulted on salary and pension payments on September 1. Critics say that while revenue growth has slowed, expenditure has risen due to populist decisions.
Not at all. Reports of our financial crisis have been overblown. Our state was the first to announce the return to Old Pension Scheme as this was part of the pre-poll guarantees. The reset on the date of salary and pension was to correct the cash flow mismanagement. Himachal Pradesh used to draw ₹2000 crore from the Reserve Bank of India every month towards salaries and pension on the 30th of every month and pay ₹3 crore as interest for that. We have now fixed 5th and 7th as the dates for salary and pension because the state gets its revenue deficit grant and GST share on these dates. This one-time change has led to an annual saving of ₹36 crore on interest. To set an example, my entire cabinet deferred its salary bill of ₹1 crore by two months. This month, we are paying salaries on 28th and 4% dearness allowance.
How has the state’s debt burden increased in two years?
It has risen by about ₹10,000 crore and now stands at ₹95,000 crore. But there has been no overdraft. The Centre has imposed a cut on our external-aided borrowing limit. If the BJP is so worried about the state’s fiscal health, it should have taken up this issue with the Union finance minister.
What are you doing to overcome the revenue deficit?
We have already overcome it. In one year, the state controlled the financial crisis and earned additional revenue of ₹2,200 crore. Fiscal prudence is our key mantra. The fiscal buoyancy has helped us clear pension arrears to 30,000 employees over 75 years.
Is the financial crisis impacting development and welfare projects?
In our first budget, we declared Kangra the state’s tourism capital. Today, we disbursed ₹32 crore as the first award for land acquisition for the Kangra airport. We are the first state to introduce MSP for milk. The state has adopted more than 4,000 destitute children and is giving free education to wards of widows. If the financial crisis is so serious, how could we do all that we are doing?
How do you respond to Union minister and BJP president Jai Prakash Nadda’s recent remark that the Congress cannot run the state government even for a day without the Centre’s help.
It is not appropriate for Nadda to say that as he belongs to Himachal Pradesh. He said what his acolyte, Harsh Mahajan, apparently fed him. What we are getting from the Centre is part of our federal share. It is not charity but our right on the central tax kitty. The Union government raises crores from cess on petrol and diesel across the country. Himachal, with 67% forest cover, is the lungs of North India, including Delhi. We have banned the cutting of trees. If we lift the ban and sell our forest wealth, we can easily make ₹1 lakh crore and wipe off our entire debt. It’s high time for the Centre to consider our demand for green bonus.
Apple is a big part of Himachal’s economy. This year again there has been a huge dumping of Iranian apple from free trade route of Afghanistan and duty on imported apple has been reduced. Have you taken this up with the Centre?
We have raised this issue, but the Centre doesn’t care. Our apple growers are not getting the price they deserve and incurring losses.
Himachal has never seen communal strife. But the recent protests by a section of Hindu outfits over illegal structures in mosques in Shimla and Mandi raised the spectre of communal polarisation in the state. Is that worrying?
How can there be a communal polarisation in a state with 97% Hindu population? The BJP tried to give it a communal colour before the Haryana assembly elections. Not more than four people participated in those protests but social media and TV channels overplayed it, claiming crowds of 40,000. Look at the bright side. The Muslim community, including the Imams, voluntarily offered to demolish the illegal constructions. There is no such example elsewhere in the country. Muslims have been living in Himachal with harmony. My government will not let anyone disturb the social fabric.
Is there rising sentiment against outsiders as your government has agreed to the verification of non-locals in Shimla?
In certain parts of Shimla, streets got crowded because of the proliferation of vendors. Our verification is not to give a communal identity card but only for creating regulated vendor zones. Anyone from anywhere in the country can come here and do his business. There is no anti-migrant feeling in Himachal. That’s because no outsider can buy land here. You need permission under tenancy laws. Locals don’t sell their land. They have no objection to those coming from outside and doing their daily business.
Given the resource crunch, how is your government going to fulfil its key poll promises such as 5 lakh jobs, free power of 300 units for households and ₹1,500 monthly allowance to all women?
We had promised five lakh opportunities for employment, not jobs. The monthly stipend to needy women has started from April 1. We will rationalise free power and make it need-based. Those paying income tax will not get it.
You managed to tide over the political crisis well by winning four of the six assembly seats but your party lost badly in the Lok Sabha elections. How comfortably placed are you now?
In the summer election, people voted for both the Congress and the BJP. We won the assembly byelections but lost the Lok Sabha contests. Our strength is again at 40 in the House (of 68 MLAs). There is no dissent in our party. My government is on a firm footing.
What are your key challenges?
My challenge is to make Himachal a green state by 2026, a self-reliant state by 2027 and the most prosperous state by 2032. Our policies are heading in the right direction and gathering pace. We are investing a lot in renewal energy, data storage, tourism and food-processing. Unemployed youth have been given 50% subsidy on e-taxis. The country’s first green hydrogen project of 1MW will take off at Nalagarh in December. I have written to Union railways minister to run the Kalka-Shimla heritage train on hydrogen. I’m not in this seat (of chief minister) for ‘satta ke sukh’, but to make people’s life better.

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