War in West Asia: After Salary Cuts For Ministers,  Himachal Government Turns To Public

After imposing major cuts on the state’s budget for the year 2026-27 and deferring 20–50% of salaries of the Chief Minister, deputy CM, ministers, and senior officials for six months, the Congress-led government in Himachal Pradesh has turned to the public for financial support to sustain development and social security programs.

On Tuesday, the state Assembly, currently in session, passed the Himachal Pradesh Value Added Tax (Amendment) Bill, 2006, proposing to levy an additional cess of up to Rs 5 per litre on petrol and diesel to support a welfare fund for orphans and widows.

The bill, which led to strong protests from the opposition benches, is seen as one of the series of measures that the Chief Minister had already hinted at to tide over the severe financial crisis caused primarily by the withdrawal of the Revenue Deficit Grant (RDG) by the centre and rising debt liability, exceeding Rs 1.10 crores.

The BJP members staged a walkout from the House, terming the government's move as a burden on the state’s public, already facing apprehensions of a rise in the petroleum products, including LPG, diesel, and petrol prices in the wake of the Middle East war.

Undeterred by the BJP’s opposition to the bill, the Chief Minister said the fuel cess will provide a dedicated revenue stream to strengthen and effectively implement welfare measures for orphans and widows across the state.

“The government is making a dedicated, stable, and sustainable source of revenue to ensure that this particular section of the state’s population doesn’t suffer because of the financial stress and non-availability of the funds when we implement cuts on ongoing programmes in other sectors," the Chief Minister said in the assembly.

Randhir Sharma, a Bharatiya Janata Party (BJP) MLA who is also the party’s chief spokesman, however, said after the cess levy, petrol and diesel would be costlier in the state compared to neighbouring states, leading to fuel inflation.

“There was already an apprehension that the prices of petroleum products would increase due to the ongoing war between the US and Iran, and now, it has started passing on to consumers in the form of rising fuel prices, driven by disruptions in global oil supply," he complained.

Amidst debate on the state’s budget in Shimla, the Leader of the Opposition, Jairam Thakur, reached Delhi and met Prime Minister Narendra Modi and apprised him about the state’s fiscal crisis and the state government implementing major cuts on the state budget and passing the blame for the crisis on the centre and the earlier BJP government.

His sudden arrival in Delhi while the assembly was debating the budget has surprised many in the state capital, as the reports suggest he was summoned to Delhi to get a first-hand brief on the crisis-ridden Congress government.

Thakur did not share his brief but criticised the government for pushing the state into a debt trap, resorting to heavy borrowings, and senseless administrative spending.

“There are financial problems in the state that don’t deny, but what the state government was doing is more nonsensical. First, the government decided to impose a heavy entry fee at toll barriers on all movement of all vehicles entering from neighbouring states. That has already seen major reactions from Punjab, threatening to levy a tax on all vehicles from Himachal. Now, it proposes to levy a cess on petrol and diesel at Rs 5 per litre in the name of widows and orphans,” he lamented.

Leader of the Opposition Jai Ram Thakur said the cess would badly hit the people of the state. "If the financial health of the state is weak, burdening people in the name of welfare is not the solution," he said

On cuts imposed on the budget outlay and salaries, which he claims are unprecedented in the state’s history since 1971, Thakur terms the situation "grave" and says it could further worsen in the coming days.

“ It is a situation of financial emergency in Himachal Pradesh. There are no funds left for the development. The current situation is a result of Congress's guarantees, not the centre, which has provided additional funding of Rs 7,300 cr to the state during the past three years. The former Chief Minister said, “It is beyond comprehension how the debt burden increased from Rs 69,000 cr to Rs 1.10 lakh crores during these years of Chief Minister Sukhu’s tenure. Now, more loans are being raised only to meet interest liabilities on existing loans, not for any development activity"

The salary deferments are going to land the government in serious trouble, he pointed out, and reminded that during COVID-19, the Andhra Pradesh government issued orders to defer salaries and pensions of employees due to financial stress.

“This was challenged in court. Later, the High Court and even the Supreme Court held the order illegal and ordered the government to pay the entire deferred amount back to the employees with six percent interest,” he recalled.