The Congress government in Himachal Pradesh has announced the termination of the free electricity scheme for taxpayers in the state, citing severe financial strain as the primary reason. This decision was made during a cabinet meeting led by Chief Minister Sukhwinder Singh Sukhu in Shimla on Thursday, July 12, 2024.
Under the new policy, families paying income tax will no longer receive the benefit of 125 units of free electricity per month. This benefit had previously been extended to all families, including taxpayers. However, the government has clarified that this change will not affect families who do not pay income tax or those living below the poverty line, who will continue to receive 125 units of free electricity monthly.
The Congress government has attributed this policy shift to the state’s precarious economic situation. The administration explained that the financial burden of the subsidy was unsustainable, with the state struggling to meet even the salary requirements of electricity employees. This fiscal pressure necessitated the removal of subsidies for income-tax-paying families.
The previous BJP government, under the leadership of Jairam Thakur, had introduced the scheme, which provided 125 units of free electricity to approximately 1.4 million families across Himachal Pradesh. This move was part of a broader effort to offer relief and support to residents. The Congress government now describes this subsidy as a financial burden, incompatible with the current economic realities.
During the 2022 assembly elections, the Congress had promised to provide 300 units of free electricity to all families in the state. However, this promise remains unfulfilled, and the recent decision marks a significant deviation from their electoral commitments.
Himachal Pradesh’s decision follows similar financial challenges faced by Karnataka, where the introduction of multiple guarantee schemes, including free electricity, rations, bus travel for women, unemployment allowances, and cash transfers for women, has significantly impacted the state’s economy. Officials in Karnataka have acknowledged that these schemes have hindered development projects, a concern now echoed by Himachal Pradesh’s administration.
In addition to ending the free electricity scheme, the Congress government in Himachal Pradesh is facing scrutiny for its increasing debt levels. The state’s debt has surpassed Rs 88,000 crore, with the current administration adding approximately Rs 19,000 crore in the past year and a half. Chief Minister Sukhwinder Singh Sukhu has admitted that the state is taking on new loans primarily to service existing debt. This has pushed the state’s debt to over 40 per cent of its GDP, with a fiscal deficit exceeding 5 per cent of GDP. According to regulations, a state’s debt should not exceed 20 per cent of its GDP, and the fiscal deficit should remain below 3 per cent.
The termination of the free electricity scheme for taxpayers is a clear indicator of the financial challenges facing Himachal Pradesh. As the Congress government navigates these economic difficulties, the focus is on balancing fiscal responsibility with the need to fulfil electoral promises and support the state’s residents.
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