Himachal's high debt-GSDP ratio makes poll freebies promises a tough task

Though comparatively prosperous than other Indian states, Himachal has a huge debt-GSDP ratio

Himachal Pradesh will vote on November 12 for 68 legislative assembly seats to choose its next government. Regardless of the state's assembly size, the upcoming elections have much at stake for both Congress and the ruling BJP, as a third force is also trying to make its presence felt. Whether the tradition of alternate rule between Congress and BJP break this time, or will the Aam Aadmi Party (AAP) make a mark in another Indian state remains to be seen as the state is just 11 days away from elections.

The state, which ranks 21st in terms of population and 18th in terms of area in the country, is more prosperous than most states. However, it has a huge debt-GSDP (Gross-State Domestic Product) ratio. For instance, its outstanding liabilities constituted or are projected to constitute over 40 per cent of its GSDP in 2020-21, 2021-22 and 2022-23. This is higher than 36.8 per cent in 2017-18 which was mostly ruled by the previous Virbhadra Singh government. The ratio stood at 37.6 per cent in 2016-17.

This may make poll promises such as Rs 1,000 to every woman above 18 years of age as made by the AAP, free electricity up to 300 units to household consumers and Rs 1,500 to poor women by the Congress, a tricky task to fulfill.

Own tax revenues (OTR) of the state saw a decline as a percentage of total revenue receipts of the state during the BJP rule till 2020-21 compared to 2017-18, the last year of the previous government or even 2016-17. However, this was the case with other state governments too, particularly during 2019-20 and 2020-21.

With the tax collections staging a smart recovery, particularly the goods and services tax (GST), the state's OTR is expected to touch 26 per cent of revenue receipts in 2021-22 and almost 30 per cent in 2022-23. However, these are just projections and their validity would be known later.

Himachal Pradesh is comparatively a prosperous state in the country. For instance, only 7.6 per cent of the people in the state were multi-dimensionally poor against one in four persons at an all-India level in 2015-16.

Only five states — Punjab, Tamil Nadu, Sikkim, Goa and Kerala — were better off than Himachal that year.

While the latest figures for 2019-20 for multi-dimensional poor have not yet come, which could have made it easier to study the performance of the Jai Ram Thakur government, one can still gauge its functioning by comparing various parameters of 2019-20 National Family Health Survey (NFHS) with 2015-16. This survey forms the basis of the multi-dimensional poverty index, brought out by NITI Aayog.

Himachal has performed quite well during the BJP government's current regime except in clean fuel for cooking. It was behind the national average in 2015-16 as well as in 2019-20 (2019-21 in case of India).

On other parameters, be it drinking water, sanitation facility, and infant mortality rate, the state was ahead of the national average during both periods. Though the percentage of population with access to electricity did not see an increase over the period, the state already has almost all of its population living in households (99.5 per cent) covered.

Also, 92.8 per cent of the male population was literate in the state during 2019-20 as against 84.4 per cent at an all-India level in 2019-21.

Similarly, 90.7 per cent of the female population in the hilly state is literate against just 71.5 per cent at an all-India level.  

Despite relative prosperity, Himachal bore lesser brunt of retail price inflation since March in the current calendar year, compared to an all-India average. For instance, the inflation rate rose to a five-month high of 7.41 per cent at the all-India level in September but fell to 4.54 per cent in the state from 4.88 per cent in the previous month.  

If one takes the previous five financial years, in three — 2018-19, 2019-20, and 2020-21— the state saw less inflation than the national average.

Himachal yielded higher growth in GSDP than the country's gross domestic product (GDP) in only one out of the previous five financial years — 2019-20. This was the year when the economy at large started slowing down even though the Covid-19 wave was yet to hit it.

In the first Covid-19 wave of 2020-21, the state economic growth decelerated at a less rate of 5.2 per cent than the national average of 6.6 per cent.

The per capita GSDP of Himachal Pradesh was higher at Rs 2,12,262 than the per capita GDP at the national level at Rs 1,46,087.