Worried over the withdrawal of Revenue Deficit Grant by the 16th Finance Commission, Himachal Pradesh Chief Minister, Thakur Sukhvinder Singh Sukhu called on Union Finance Minister Nirmala Sitharaman in New Delhi on Monday and sought a financial package under special Central assistance to cover the revenue deficit for the financial year 2026-27.
The Chief Minister apprised the Union Finance Minister that the discontinuation of Revenue Deficit Grant (RDG) will have an adverse impact on the financial health of the state and added that Himachal Pradesh cannot be compared to other states whose RDG has been discontinued. He said that the RDG contribution for the state was about 12.7 per cent, which was the second highest after Nagaland. He said that big states can withstand the discontinuation, but the economy of Himachal Pradesh cannot. He added that assessing all states on a single yardstick was neither healthy nor transparent.
He termed the discontinuation as 'undermining the spirit of cooperative federalism'. He said that Article 275(1) of the Constitution of India provides for such grants to states that cannot bridge the gap between their revenue receipts and expenditure. He said this was the first time that the Finance Commission has totally ignored the developmental needs of small hill states.
He also informed the Finance Minister that in the last two to three years several measures were taken to reduce expenditure, no off-budget borrowing was resorted to and about Rs 600 crore annually was raised through various cesses. He said the state suffered revenue losses due to GST and added that despite raising tax rates wherever feasible and rationalising subsidies, the gap in revenue deficit cannot be bridged.
Sukhu requested the Union Finance Minister to constitute a committee to properly assess the economies of hill states and recommend corrective measures.
Nirmala Sitharaman assured sympathetic consideration of the demands of the state. Principal Advisor to the Chief Minister Ram Subhag Singh and Principal Secretary (Finance) Devesh Kumar accompanied the Chief Minister.
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