BHARARISAIN: Uttarakhand is navigating a precarious economic tightrope. While recent data highlights an encouraging rise in the Himalayan state’s per capita income, the state’s debt burden is expanding in tandem, casting a long shadow over its fiscal future.
According to government figures for the 2024-25 fiscal year, the state’s per capita income has surged to Rs 2,73,921, significantly outpacing the national average. However, this prosperity is accompanied by a mounting liability: the state’s total debt has now crossed the Rs94,000 crore mark.
Budget estimates suggest that by March 2027, Uttarakhand’s total debt liability could breach the Rs 1 lakh crore milestone. Since the state’s formation in 2000, when debt stood at a modest Rs 9,000 crore, the figure has ballooned rapidly.
The most rapid escalation was recorded between 2010-11 and 2019-20. While the growth rate of this debt has decelerated slightly after the 2020-21 fiscal year, the absolute debt continues to climb. In the last financial year alone, the state added nearly Rs 11,000 crore to its liabilities, pushing the total from Rs 83,000 crore to approximately Rs 94,000 crore.
State Finance Secretary Dilip Jawalkar remains optimistic about the current fiscal management. "Since 2020-21, the growth rate of our debt has been consistently declining. The total debt is currently around 25 percent of the GSDP, which remains well within the 30 percent limit mandated by the FRBM Act," Jawalkar stated.
The government maintains that the situation is controlled and that fiscal discipline is being balanced with essential development projects.
However, financial experts warn that this optimism may be premature. Without a structural boost in revenue generation, the state risks facing severe repayment pressure. Avikal Thapliyal, a former member of the State Finance Commission, told TNIE that the crisis stems from structural weaknesses.
"The rise in debt is driven by a limited industrial base, continuous investment in infrastructure, mounting expenditures on salaries, pensions, and social schemes, and high costs associated with disaster management," Thapliyal explained. "Compounding this is the state’s heavy financial reliance on the Centre and the under-utilization of its own vast natural resources."
The rise in per capita income, from Rs 1,94,670 in 2021-22 to the current Rs 2,73,921, is being attributed to robust growth in the tourism, service sectors, and the booming homestay industry. Yet, for policymakers, the challenge remains clear: to sustain this growth, Uttarakhand must move beyond borrowing and urgently pivot toward strategies that enhance revenue and strengthen debt management.