Shimla, Feb 9 (UNI) Himachal Pradesh might be forced to shift to Unified Pension Scheme as freezing of RDG by the union Government deepen fiscal stress, this was indicated by state finance department during presentations on the impact of freezing Revenue Deficit Grant by the centre.
Mounting fiscal stress following the withdrawal of the Revenue Deficit Grant (RDG) might be force Himachal Pradesh to opt for the Unified Pension Scheme (UPS) introduced by the Centre, Finance Secretary Devesh Kumar told the State Council of Ministers on Sunday.
He cautioned that the state’s pending liabilities and future arrears could not be sustained within existing revenue receipts, making the continuation of the Old Pension Scheme (OPS) financially unviable.Interacting with the Cabinet,
Kumar said that after the discontinuation of RDG and reduction in central support, the state would find it increasingly difficult to meet committed expenditure if it continued with OPS or even the New Pension System. He indicated that adopting the Rs 10,000 Unified Pension Scheme launched by the Narendra Modi government last year could be the only viable route to ease the growing debt trap.
The Finance Secretary pointed out that the state inherited liabilities of around Rs 8,500 crore in 2022 from the previous BJP government on account of pending pay revision arrears, which could still not be disbursed due to resource constraints.
He said the situation had worsened after the Centre’s decision to discontinue RDG, further shrinking fiscal space and forcing the state to consider hard policy choices.The grim assessment came a day after the Finance Department issued a notification warning that the state government would not be able to defray pay and pension revision arrears of about Rs 8,500 crore, nor clear DA and DR arrears amounting to nearly Rs 5,000 crore.
It also stated that no further DA or DR instalments could be released, while developmental liabilities of about Rs 2,000 crore were likely to roll over to the next financial year.
Court-ordered liabilities of around Rs 1,000 crore and pendency under schemes such as HIMCARE, Sahara and MIS would add to the pressure.The state government had announced during Republic Day celebrations this year the release of about Rs 92 crore to pensioners and family pensioners towards pay revision arrears, and around Rs 90 crore to Class-IV employees.
However, following the latest financial assessment, officials indicated that these payments may now not be possible.The Congress government, which came to power promising the restoration of OPS and has already extended benefits to thousands of pensioners, now finds itself in a difficult position amid shrinking grants-in-aid and rising committed expenditure.
Several welfare and health insurance schemes have been frozen, and the state has been cautioned to prepare for conditions resembling a financial emergency.Officials said that various boards and corporations, including the HRTC, may no longer receive subsidies or grants-in-aid, indicating a possible withdrawal of concessions on power, water, transport fares and garbage services for the general public.
With borrowing needs projected at around Rs 10,000 crore and interest and principal repayments estimated at nearly Rs 13,000 crore annually, the state’s fiscal outlook remains precarious.The Finance Department warned that without political resolution and reconsideration of RDG by the Centre, Himachal Pradesh would be left with little option but to restructure pensions, freeze schemes and sharply curtail subsidies to stay afloat.
