Punjab finances remain under severe stress as Himachal grapples with structural pressures; Haryana showed relative stability

Chandigarh: The economic scenario in the region presents a worrying picture, with Punjab ranked as the most fiscally stressed state among the 18 major states, while Himachal Pradesh faces mounting structural pressures linked to rising debt and expenditure commitments. In contrast, Haryana shows relatively moderate fiscal stability, according to the latest Fiscal Health Index (FHI) for 2023–24 released by NITI Aayog.According to the index, Punjab ranked last (18th) with an FHI score of 12.4, reflecting weak fiscal prudence, high debt pressures and limited flexibility in public finances. In comparison, Haryana ranked 11th with a score of 34.5, while Himachal Pradesh (9th among the Himalayan and north-eastern states) figures among fiscally stressed states due to structural constraints, finishing second last ahead of Manipur.Punjab's rising liabilities and persistent fiscal stressPunjab's fiscal profile reflects the strain of rising liabilities and persistent structural imbalances. Despite continued investment in infrastructure, agriculture, education and welfare programmes, a large portion of the state's revenue is absorbed by committed expenditure such as salaries, pensions and interest payments, leaving limited fiscal space for new development initiatives.The state's total developmental expenditure increased from Rs 0.51 lakh crore in 2019–20 to Rs 0.61 lakh crore in 2023–24, a rise of about 19.6%, with social services accounting for 27% and economic services 21% of spending. Total capital expenditure shows higher spending in economic services (46%) and social services (45%). Major areas of investment include agriculture, rural development, irrigation, energy, transport, education, health, and welfare of vulnerable groups, reflecting the state's focus on infrastructure development and human capital enhancement.However, fiscal pressures remain significant. The share of committed expenditure in revenue receipts remained high, averaging around 78% during 2019–24, indicating limited fiscal flexibility. Although it declined from 81% in 2019–20 to 74% in 2021–22, it rose again to 80% in 2023–24 due to increased spending on salaries, pensions, and interest payments. Punjab's revenue receipts increased by 44.8%, from Rs 61,575 crore in 2019–20 to Rs 89,192 crore in 2023–24, driven primarily by tax revenues, which grew 67.8%, while non-tax revenue and grants-in-aid grew only marginally by 8.7% and 2.8%, respectively.Fiscal imbalances remain evident in deficit trends. The revenue deficit increased from Rs 5,307 crore in 2019–20 to Rs 11,738 crore in 2022–23 before moderating to Rs 8,295 crore in 2023–24, while the fiscal deficit peaked at Rs 30,452 crore (4.18% of GSDP) in 2022–23, exceeding the normative 3% threshold. Debt levels also surged, with total liabilities rising from Rs 2.29 lakh crore in 2019–20 to Rs 3.55 lakh crore in 2023–24, a 55% increase over 5 years.Gradual consolidation but limited spending flexibility in Haryana Haryana's fiscal position reflects gradual consolidation supported by improved tax revenues, particularly commercial taxes. However, the state continues to face constrained expenditure flexibility.In 2023–24, committed and inflexible expenditure accounted for about 62% of revenue expenditure, reducing flexibility for development or capital projects. Revenue expenditure dominated overall spending, accounting for 82–93% of total expenditure between 2019 and 2024.While revenue expenditure increased by 33.41% between 2019–20 and 2023–24, capital expenditure declined by 9.88% during the same period, indicating limited asset creation. Revenue receipts grew by 13.6% in 2023–24, with the state's own tax revenue increasing 15.2% and total tax revenue up 15.7%, due to buoyancy in commercial taxes. Own tax revenue increased by 69.32% in 2023–24 over 2019–20, and the actual receipts under non-tax revenue increased by 9.50% during the same period. The state's revenue deficit fell by about 31% to ₹11,881 crore, while the fiscal deficit remained within the FRBM target at 2.87% of GSDP. Haryana's debt-to-GSDP ratio improved from 32.7% in 2020–21 to 29.8% in 2023–24, though it remains above long-term targets.Structural pressures intensifying in hill stateHimachal Pradesh's fiscal trajectory reflects a mix of structural strengths and emerging pressures. While the state historically maintained revenue surpluses, recent years saw a shift towards revenue deficits, indicating that borrowings are increasingly used to meet recurring obligations rather than development-oriented investments.The composition of spending also shifted. The share of general services increased from 34.48% in 2019–20 to 38.64% in 2023–24, while economic services declined from 27.64% to 23.36%, indicating reduced allocation to growth-oriented investments.Revenue expenditure increased by 45.56% between 2019 and 2024, largely due to pension liabilities under the Old Pension Scheme, increased interest payments on market loans, and greater spending on disaster relief works. Committed expenditure accounted for 64–70% of revenue expenditure during this period.Revenue receipts increased by 27.42% between 2019–20 and 2023–24. Own tax revenue and non-tax revenue increased by 11.70% and 5.03%, respectively, in 2023–24 compared with 2022–23. The average growth rate of own tax revenue over the past 5 years was 9.53%, while the average growth rate of non-tax revenue was only 2.08%. However, declining grants-in-aid — down by 4.23% in 2021–22, 5.10% in 2022–23 and 10.71% in 2023–24 over the previous year — added fiscal pressure. Deficit indicators also highlight stress. The revenue deficit stood at 3.30% of GSDP in 2022–23 and 2.68% in 2023–24, while the fiscal deficit was 6.46% and 5.43%, respectively, during the same period. Meanwhile, the state's debt-to-GSDP ratio increased from 39.09% in 2019–20 to 43.98% in 2023–24.Score cardMAJOR STATESStates | FHI Score | Rank 2023–24 | Quality of Expenditure | Revenue Mobilisation | Fiscal Prudence | Debt Index | Debt Sustainability Punjab | 12.4 | 18 | 8.1 | 29.8 | 5.9 | 2.1 | 15.9 Haryana | 34.5 | 11 | 35.8 | 48.0 | 27.3 | 32.8 | 28.7 NE/HIMALAYAN STATESHimachal Pradesh | 22.0 | 9 | 13.2 | 64.2 | 3.0 | 24.9 | 4.6