Communist Party of India (Marxist) Submits Comprehensive Demands to 16th Finance Commission in Shimla

Shimla, June 24 - The Communist Party of India (Marxist) Himachal Pradesh State Committee has presented a comprehensive note to the 16th Finance Commission in Shimla. This submission emphasizes the state's unique challenges and calls for equitable financial devolution.

They presented the major points pressing for more aid from the Commission in a meeting here at Peter Hoff are: 

Forest Dominance and Economic Dependence

Himachal Pradesh, covering 55,673 sq. km, has 67% of its area designated as forest land under stringent central government policies like the Forest Conservation Act (FCA).

This leaves limited land available for agriculture and other revenue-generating activities.

Consequently, the state relies heavily on central assistance, which accounts for over 70% of its revenue.

The state's restricted revenue options from logging have further declined since the central government banned green felling in 1998.

Despite these challenges, the state's forests serve crucial ecological functions, including carbon sequestration and acting as watershed catchments benefiting several North Indian states.

The CPI(M) leaders- Rakesh Singha, Dr Kuldip Singh Tanwar, Sanjay Chauhan-  argue that this warrants recognition through increased financial devolutions from the central government.

Social Development and Infrastructure Deficits

While Himachal Pradesh has achieved notable progress in social indicators like literacy and healthcare, significant disparities persist between urban and rural areas.

Rural areas often struggle to access quality education and healthcare services. The state's unique topography and low population density contribute to higher costs in service delivery and infrastructure maintenance.

The state's infrastructure, particularly railway connectivity, remains underdeveloped, hindering economic growth and market access.

Over 70% of farms operate at subsistence levels due to inadequate infrastructure, leading to higher production costs and post-harvest losses.

Approximately 30% of perishable agricultural produce is lost due to insufficient storage and transportation facilities.

Migrant Labour and Economic Strain

Himachal Pradesh attracts around 5.29 lakh migrant workers annually from various regions for sectors like agriculture, construction, and tourism.

This influx increases pressure on the state's development infrastructure and finances, necessitating additional financial allocations for suitable infrastructure development.

Natural Disasters and Financial Burden

The state's mountainous terrain makes it highly susceptible to landslides, earthquakes, and other natural disasters.

Recent calamities, including landslides and flash floods in 2023, caused substantial damage to infrastructure, necessitating urgent funding for restoration.

Over the past five years, natural disasters have caused losses exceeding Rs. 8,064 crores, and recent disasters have escalated losses to Rs. 9,712 crores, underscoring the need for immediate financial support.

Historic Injustices and Revenue Claims

The CPI(M) highlights the state's unresolved revenue claims under the Punjab Re-organization Act of 1966, including a 7.19% share of revenue from major hydel projects upheld by the Supreme Court.

The note urges the Finance Commission to rectify these historical injustices and allocate a lump sum of Rs. 8,000 crores as a special grant for pre-1990 hydel projects.

Expectations from the 16th Finance Commission

The CPI(M) stresses the need for a balanced economic landscape and calls for reduced dependency on discretionary central funds.

They advocate for the Finance Commission to function as an independent constitutional body and address the unique realities of Himachal Pradesh in its financial devolution formula.

The state also seeks a grant in the shape of a Revenue Deficit Grant without tapering, to cover gaps between revenue generation and expenditures.

They   criticize the 13th Finance Commission's formula, which resulted in inadequate devolution for Himachal Pradesh, and calls for transparency in the allocation of surcharge and cess collections by the central government.

Disaster Relief and Infrastructure Development

The CPI(M) proposes that hill states like Himachal Pradesh should receive full compensation for disaster-related losses and increased State Disaster Response Fund (SDRF) allocations.

They also emphasize the need for liberal grants to develop railway infrastructure and advocate for zero GST on agriculture and allied sector equipment to alleviate the agrarian crisis.

The CPI(M) urges the 16th Finance Commission to consider Himachal Pradesh's challenging topography, climate, and economic structure in its financial policies.

Enhanced financial allocations would support sustainable development and balanced economic growth, aligning with national objectives of inclusive development.

They hope that Commission will address the state's unique conditions and establish appropriate principles for fund allocation.

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