Himachal Bargains for a Bigger Share of Central Funds as 16th Finance Commission Visits Shimla...

Shimla, June 20—Himachal Pradesh is gearing up to make a strong case for a more significant share of central funds as the 16th Finance Commission (FC) arrives in Shimla on June 24-25.

The state plans to highlight its environmental achievements and unique challenges during this crucial meeting.

 Himachal’s Major Bargaing Points:

1. Environmental Achievements

Increase in Forest Cover:Himachal Pradesh has seen a notable rise in forest cover, contributing significantly to carbon sequestration and climate mitigation efforts.

The state argues that these achievements come with high maintenance costs, and more funds are essential to sustain these efforts.

Hydropower Production: Himachal Pradesh generates over 11,000 MW of hydropower, significantly contributing to clean energy.

This hydropower production results in the sequestration of an estimated 15 million tonnes of carbon emissions annually.

The state contends that this contribution to reducing greenhouse gases should be recognized with additional central funding.

Ban on Green Felling:The state's strict regulations against green felling have preserved its natural resources but have also limited its revenue from forest products by way of working plans and salvage felling. 

Green Initiatives:  Investments in solar power, hydropower projects, and green transportation are part of Himachal’s commitment to sustainable development.

These projects require substantial funding for infrastructure and maintenance.

2. Challenges and Fiscal Needs

Natural Disasters: Frequent landslides and floods due to the state’s mountainous terrain and extreme weather events pose significant financial burdens.

The cost of disaster management and recovery efforts is substantial, making a strong case for increased central assistance.

Infrastructure Development: The state's geography demands high investment in infrastructure to improve connectivity and support tourism, a major revenue source for Himachal.

Enhanced funding will help develop resilient infrastructure to withstand natural calamities.

3. Current Funding and Expectations Forest Cover Incentives: Himachal will bat for in increase in its  share of 10.5 per cent for forest covet for obvious reasons.

Under the 15th Finance Commission, states across the country received a total of ₹85,526 crores based on forest cover.

This funding reflected the increasing importance of environmental conservation.

Himachal Pradesh alone received about  ₹11,250 crores from the central government for maintaining and expanding its forest cover,  according to sources.

The state will push for a higher weightage in the 16th FC’s tax devolution formula, arguing that its environmental efforts have national and global benefits as  major river basins of Satluj, Beas, Ravi,  Chenab and its vast forest cover  make for a major ecosystems for the grain bowl of the india that ensures food security to the millions in India.

Debt Management:

Himachal is seeking a specific path to debt sustainability. Presently its debt is in excess of Rs 80, 000 crores and state has taken steps to  increase its revenue to tune of Rs 2200 Crore.

Given its unique fiscal situation, tailored recommendations for managing debt and fiscal responsibilities are crucial, said experts.

 and Background of Finance CommissionContext

The Finance Commission, constituted every five years, recommends how taxes are distributed between the Union and states, grants-in-aid, and resources for local governments.

The 16th FC, chaired by N.K. Singh, is set to cover the period from April 1, 2026, to March 31, 2031.

Unlike the detailed ToR of the 15th FC, the 16th FC’s ToR are streamlined, adhering closely to constitutional provisions.

Experts like R. Srinivasan and J. Jeyaranjan from the Tamil Nadu State Planning Commission have already advocated for a more transparent process in the FC’s decision-making.

They suggest that the FC should publish draft papers on its ToR and engage states in open discussions on revenue projections and debt sustainability- a point yet to be accepted by the Centre. 

Himachal’s Stakeholders Speak

Chief Minister Sukhvinder Singh Sukhu emphasized that “Himachal Pradesh’s contributions to green energy and forest conservation should be recognized.

"We need more substantial financial support to continue our sustainable development journey as we are trying to make Himachal a green and self-reliant  state".  

The Finance Commission’s visit to Shimla is an opportunity for Himachal Pradesh to present its case for a fair share of central funds, reflecting its environmental leadership and addressing its fiscal challenges, say experts and IMI President Ramesh  Negi,  a civil society group  who are not only supporting Himachal but also the entire Himalayan states for getting a bigger share in Central funds. 

All eyes are now on how the Sukhu's team of ministers and advisors churn out datas to make them the bargaining chips to the  16th Finance Commission seeking liberal funds. 

It is a question of making  solid efforts for good funds for the next five years which are crucial for development and sustainability efforts in the state. 

But major challenge for the Sukhu government is  even the finance commission accepts its demands  it still is Central Prerogative to accept all of its recommendations.

So it will be PM Narendra Modi who has to take the call. There is no #doubleengine  government in Himachal Pradesh. Sukhu's neighbour Pushkar Singh Dhami enjoys that privilege.