The Congress government in Himachal Pradesh is in a fix over the 16th Finance Commission report, in which the Revenue Deficit Grant (RDG) has been totally stopped for states. The government has decided to call a special session of the state Assembly on February 17 to discuss the issue.
While Chief Minister Thakur Sukhvinder Singh Sukhu has called it a grave injustice to the debt-ridden Himachal Pradesh, saying the state would lose financial assistance worth Rs 47,000 crore over five years, the opposition BJP has maintained that the state has been allocated more funds under different budget heads this time. The BJP also alleged that the government’s wasteful spending on non-essential items has created the financial crisis.
“We never expected that the RDG would be completely stopped. The state made several representations to the Finance Commission, and I personally met the Union Finance Minister on a different issue, during which we demanded that the RDG should not be tapered as it affects the state’s finances. But see what has happened. It is not in the interest of the state, and we strongly oppose it. The BJP should first study what has happened and then comment,” said Chief Minister Thakur Sukhvinder Singh Sukhu.
He said the hill state of Himachal Pradesh cannot mobilise resources beyond a point.
“We safeguard forests and the environment and protect our rivers for the benefit of the entire North India. And what do we get in lieu of this?” he said, adding that the Himachal Pradesh government had to spend crores of rupees on relief measures after natural disasters in 2023 and 2025, which had resulted in unprecedented damage. The Central government had also turned a cold shoulder to the state in granting disaster relief money, he added.
Sukhu hinted at some harsh fiscal measures in the coming days and spoke about imposing domr additional taxes on hydropower projects for the land provided by the state government.
He said the state was not being compensated for retaining the green cover in the state through a complete ban on tree felling and for providing water to neighbouring states.
“Himachal being a mountain state, the resource mobilization is limited to an extent, while the expenditure goes up every year. And for the last three years, the Centre has also not helped the state with required financial assistance or even a relief package,” the CM said.
On the other hand, the BJP leadership said the Congress government lacked financial prudence and had failed to present the state’s case before the sixth Finance Commission. “They are shouting as if the state was running with RDG only. Things would have been better, had the Congress government been careful about spending money in three years. They are blaming the Centre for their own failures,” said Leader of Opposition Jai Ram Thakur. He said the BJP would decide its course of action when the notification for the special Vidhan Sabha session is issued.
In general, during the three years of Congress rule, there is a widespread sense of financial insecurity in the state, from top to bottom. While the CM has been talking about the worsening financial crisis from day one, the government’s functioning does not reflect any such crisis for the top leadership. However, other sections, including over three lakh employees, unemployed youth, and the private sector, have borne the brunt of this crisis.
Despite repeatedly citing financial distress during natural disasters, the government suddenly raised the salaries of all Chairmen and Vice Chairmen of boards and corporations by Rs 1 lakh. While it withheld employee benefits, froze recruitment to vacant posts, and withdrew the existing free electricity units against its promise to provide free power up to 300 units — citing financial crunch. It also brought the Bill for hiking MLAs’ salaries, which was surprisingly passed without opposition from the BJP.
This contradictory behaviour of both the government and even the BJP has confused many, with the latest controversy being the purchase of costly cars for some political appointees of the Congress government as well as for the Leader of Opposition.
“Nobody is sensitive in political circles to the plight of the common masses. All the cuts are implemented for the ordinary people, while the power circles, including the bureaucrats, are having a field day even in the financial crisis. Their perks are increasing day by day and they are the ones who are getting rehabilitated after retirement, while the potential youth is crying for jobs,” said a political observer.
He added that the government must focus on positive resource mobilisation, build better relations with the Centre, and move away from the rhetoric of ‘Vyavastha Parivartan’, which only drains administrative energy, or else the state could face deep financial trouble in the future.
Official sources said the Congress government had planned several budgetary initiatives in its fourth year, keeping political considerations in mind, assuming that RDG allocations would give it considerable financial freedom. However, the Finance Commission’s decision shattered those hopes, forcing the government to rethink its strategy.
It is pertinent to mention that the state is currently under a debt burden of over Rs 1 lakh crore.
Also Read: Himachal police reshuffle: 14 IPS, 4 SPs shifted
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