Himachal Pradesh State Budget 2026-27 Analysis

Key Highlights

• Total expenditure (excluding debt repayment) for 2026-27 is Rs 50,088 crore — a 23% cut from the 2025-26 revised estimate of Rs 64,657 crore and about 5% below even the 2025-26 budget estimate of Rs 52,708 crore; including Rs 4,840 crore of debt repayment, the budget totals Rs 54,928 crore.
• Fiscal deficit is targeted at Rs 9,698 crore (3.5% of GSDP), a steep consolidation from 6.6% of GSDP (Rs 16,708 crore) in the 2025-26 revised estimates — but still above the 3% annual limit recommended by the 16th Finance Commission for 2026-31.
• Revenue deficit narrows to Rs 6,577 crore (2.4% of GSDP) from 3.9% in 2025-26 RE; the primary deficit falls 76% to Rs 2,427 crore (0.9% of GSDP).
• Committed expenditure of Rs 35,641 crore — salaries Rs 16,603 crore, pensions Rs 11,766 crore, interest Rs 7,272 crore — consumes 88% of revenue receipts, against a 50% all-state average budgeted in 2025-26.
• Capital outlay is slashed 70% to Rs 3,090 crore (roughly 6% of the budget) from Rs 10,229 crore in the 2025-26 revised estimate, with Rs 1,322 crore for roads and bridges and Rs 748 crore for irrigation and flood control works.
• The 16th Finance Commission discontinued revenue deficit grants — Himachal received Rs 37,199 crore under this head over 2021-26, tapering from Rs 10,249 crore in 2021-22 to Rs 3,257 crore in 2025-26, and now zero from 2026-27.
• Central tax devolution rises 21% to Rs 13,950 crore as the 16th Finance Commission raised Himachal's share of the divisible pool from 0.83% to 0.91%; overall central grants nonetheless fall 48% to Rs 7,173 crore.
• Own tax revenue is budgeted at Rs 15,290 crore (up 10% over 2025-26 RE), with State GST at Rs 6,655 crore (43% of own taxes) and own-tax-to-GSDP steady at 5.5%.
• Outstanding liabilities are estimated at 40.5% of GSDP at end-2026-27 (41% in 2025-26 RE), among the heaviest state debt ratios in India; outstanding guarantees add Rs 3,100 crore (1.34% of GSDP) as of March 2025.
• Education gets the largest allocation at Rs 9,806 crore — 19.6% of expenditure versus the 14.5% all-state average — including Rs 1,296 crore for Samagra Shiksha.
• The flagship Mukhya Mantri Apna Sukhi Parivar Yojana targets one lakh poor families with 300 free electricity units, housing support, and Rs 1,500 per month for women under the Indira Gandhi Pyari Behna Sukh Samman Nidhi Yojana.
• MSP for natural-farming wheat rises from Rs 60 to Rs 80 per kg (maize Rs 40 to Rs 50, turmeric Rs 90 to Rs 150), and milk procurement prices rise Rs 10 per litre (cow milk Rs 51 to Rs 61).
• As a fiscal austerity signal, salaries of elected representatives and senior officials are deferred for six months; GSDP for 2026-27 is projected at Rs 2,77,497 crore, 9% nominal growth.