Key Details
The CAG’s State Finances Audit Report 2024–25: Government of Himachal Pradesh, Report No. 2 of 2026 examines the State’s fiscal position, budget management and financial reporting.
Fiscal position
Outstanding liabilities reached ₹1,02,187.62 crore, equivalent to 44.11% of GSDP.
The revenue deficit was ₹6,804.61 crore, or 2.94% of GSDP.
The fiscal deficit stood at ₹12,611.05 crore, or 5.44% of GSDP, against the prescribed target of 3%.
Of ₹26,622.16 crore in public-debt receipts, ₹18,168.81 crore—68.25%—was used to repay earlier borrowings.
Salaries, pensions and interest payments totalled ₹33,266.28 crore. Including subsidies, rigid expenditure reached ₹35,138.66 crore, or nearly 86% of revenue receipts.
Capital outlay declined to 2.57% of GSDP. Expenditure of ₹661.89 crore remained tied up in 41 incomplete projects.
Budget execution
Against an overall budget of ₹79,475.53 crore, utilisation was ₹75,325.02 crore, or 94.78%.
Expenditure of ₹438.66 crore was incurred in 16 cases without any budget provision.
Disbursement exceeded legislative authorisation by ₹3,102.88 crore across seven grants and four appropriations.
Fourteen schemes received provisions totalling ₹673.11 crore but recorded no expenditure.
Supplementary provisions of ₹1,575.44 crore proved unnecessary in 13 cases.
Reporting and accountability
2,521 utilisation certificates covering ₹3,324.53 crore were outstanding at the end of March 2025.
Expenditure of ₹2,666.96 crore was booked under the residual category “Other Charges”, obscuring its precise purpose.
The audit found non-transfer or retention of earmarked collections, including milk, natural-farming, environment and construction-worker welfare cesses.
Only 72.4% of expenditure was fully reconciled with the Accountant General’s accounts during 2024–25, down from full reconciliation in the preceding two years.
Economic Growth Has Not Stabilised the State’s Finances
Himachal Pradesh’s GSDP grew 9.2% in 2024–25, while revenue receipts increased 4.34%. The CAG finds that this growth did not produce a comparable improvement in the State’s own revenue mobilisation or reduce its fiscal imbalance.
Central grants also declined, including a reduction of ₹1,800 crore in the Post-Devolution Revenue Deficit Grantduring the year. With current expenditure continuing to exceed revenue receipts, the State depended on borrowings not only for investment but also to support its existing expenditure and debt obligations.
Debt Is Increasing Without a Corresponding Expansion in Assets
The State’s liability-to-GSDP ratio of 44.11% was above both the 31.8% average for northeastern and Himalayan States and the 27.94% average for all States excluding Union Territories.
The composition of borrowing sharpens the concern. More than two-thirds of public-debt receipts during 2024–25 went towards principal repayments, while capital outlay remained below ₹6,000 crore. This limits the amount of new debt available for roads, water systems and other assets capable of supporting future economic activity or revenue.
The quality of existing capital spending is also affected by delayed completion: ₹661.89 crore had already been spent on 41 unfinished projects, some dating back more than a decade.
Salaries, Pensions, Interest and Subsidies Dominate Available Revenue
Committed expenditure on salaries, pensions and interest absorbed almost 70% of revenue expenditure. Once subsidies were included, rigid spending was equivalent to nearly 86% of revenue receipts.
This leaves the State with little flexibility to absorb emergencies or expand development expenditure without additional borrowing. It also exposes capital investment to compression when revenue or grants fall short, because salaries, pensions and interest cannot be reduced quickly.
The CAG additionally found that ₹6,239 crore invested in State public-sector enterprises and other bodies yielded returns of only ₹191 crore, indicating that existing financial assets were making a limited contribution to the budget.
Budget Allocations Did Not Reliably Predict Actual Spending
The audit identifies weaknesses at both ends of budget execution. Some expenditure exceeded legislative approval or proceeded without a budget provision, while other allocations remained unused.
The ₹673.11 crore provided for 14 schemes with no expenditure indicates that announcing an allocation did not ensure implementation. Conversely, the ₹3,102.88 crore spent beyond authorisation requires regularisation by the State Legislature.
Large savings, unnecessary supplementary grants and nearly one-third deviation in voted capital expenditure point to weaknesses in departmental estimates and project readiness—not simply an aggregate underspending problem.
Accounting Gaps Blur the State’s Actual Fiscal Position
Pending utilisation certificates mean the government cannot readily establish whether ₹3,324.53 crore in grants was used for its intended purpose. Of this amount, ₹1,200.49 crore related to centrally sponsored schemes.
The extensive use of “Other Charges” similarly reduces visibility over spending. More than half of the ₹2,666.96 crorebooked under this residual category related to disaster relief, making it harder to identify the exact composition of relief and rehabilitation expenditure without examining individual vouchers.
The audit also concludes that the retention of public receipts outside the appropriate government accounts and non-payment of interest due to reserve funds distorted reported balances and deficits. These are not merely procedural defects: they affect how accurately the State’s fiscal position is presented to the Legislature and the public.
Policy Relevance
The report places the principal responsibility for correction across three parts of the State’s financial system:
Institution | Immediate significance |
|---|---|
Finance Department | A credible fiscal-consolidation path must address the growth of liabilities, improve revenue forecasting and protect productive capital expenditure from being crowded out by rigid spending |
Line departments | More realistic scheme costing, project readiness and timely utilisation certificates are necessary to reduce unused allocations and establish whether grants achieved their intended purposes |
State Legislature and Public Accounts Committee | Excess expenditure requires regularisation, while recurring departures from budget authorisation need closer scrutiny before additional appropriations are approved |
Treasury and accounting authorities | Monthly reconciliation, proper classification of expenditure and transfer of earmarked receipts are essential for presenting a reliable fiscal position |
The central policy concern is the interaction among these failures. High debt reduces fiscal flexibility; rigid expenditure limits investment; weak project and budget management lowers the value obtained from the remaining capital spending. Addressing any one element without the others is unlikely to restore fiscal space.
Follow the Full Report Here: State Finances Audit Report 2024–25: Government of Himachal Pradesh, Report No. 2 of 2026