Chief Minister Sukhvinder Singh Sukhu met Union Finance Minister Nirmala Sitharaman in New Delhi today and urged her to provide a financial package under Special Central Assistance to compensate for the revenue deficit for the financial year 2026-27.
The Chief Minister informed the Union Finance Minister that the discontinuation of the Revenue Deficit Grant (RDG) has adversely affected the state’s financial position. He said that Himachal Pradesh cannot be compared with other states where RDG has been discontinued. While larger states may be able to manage the situation arising from the withdrawal of RDG, the economy of Himachal Pradesh is not prepared to face such a scenario. He emphasised that it is not appropriate to assess all states on the same parameters.
He stated that after Nagaland, Himachal Pradesh received nearly 12.7% as a Revenue Deficit Grant contribution, which was the second highest in the country. The Chief Minister described the decision to discontinue RDG as weakening the spirit of cooperative federalism. He said that Article 275(1) of the Constitution of India provides for grants to states that are unable to bridge the gap between their revenue receipts and expenditure.
Mr Sukhu said this is the first time that the Finance Commission has completely overlooked the developmental needs of small hill states. He informed the Finance Minister that the state government has taken several decisive steps over the past two to three years to curtail expenditure. No off-budget borrowing has been undertaken, and approximately Rs. 600 crore is being mobilised annually through various cess measures.
He added that the implementation of GST has also adversely impacted the state’s revenue. Despite increasing tax rates in accordance with requirements and rationalising subsidies, the state government is unable to bridge the revenue deficit gap.
The Chief Minister requested the Union Finance Minister to constitute a committee for proper assessment and reforms concerning the economy of hill states. The Union Minister assured that the state’s demands would be considered sympathetically.
