Shimla, February 13:
An all-party meeting convened at Peterhoff to forge a united stand on Himachal Pradesh’s deepening fiscal crisis ended without political consensus on Friday, instead laying bare sharp political divisions over the future of the Revenue Deficit Grant (RDG)—a grant that the 16th Finance Commission has proposed to discontinue from 2026 to 2031.
CM Sukhu managed to bring all parties on board, but as expected they differed on the Vyastha Parivartan and failure of the Sukhu government to cut down non-planned expenditure and burgeoning salaries and pensions bills and reform the loss making state undertakings riddled with corruption.
It was the CM who had inducted CPSs when he took over just to ensure his survival to run the government. Later High Court struck down the CPSs appointments but it also amounted to wasteful expenditure.
What was projected as a collective platform to defend Himachal’s financial interests degenerated into political one-upmanship, with parties trading accusations while failing to agree on a concrete strategy to negotiate with the Centre for continuation or substitution of RDG.
Raising more questions on seriousness was the fact that Deputy CM Mukesh Agnihotri remained conspicuous by his absence in this crucial meeting today.
₹6,000 crore annual hole stares Himachal in the face
The numbers presented by officials were stark. Finance Secretary told the meeting that RDG constituted nearly 12.7 per cent of the state’s budget under the 15th Finance Commission, helping bridge the gap between revenue receipts and unavoidable expenditure such as salaries, pensions and welfare commitments.
With RDG set to end from April 2026, Himachal faces a projected annual shortfall of around ₹6,000 crore for the next five years, even without accounting for accumulated development liabilities and pending court awards.
Sukhu pitches RDG as hill-state necessity
Chief Minister Sukhvinder Singh Sukhu argued that discontinuing RDG amounts to a structural injustice to hill states with limited revenue potential due to geography, forests and environmental constraints.
He warned that without RDG—or an equivalent untied support—basic governance functions, welfare payouts and the state’s ability to provide matching funds for Centrally Sponsored Schemes would come under strain. Sukhu urged political unity to exert sustained pressure on the Centre to restore the grant.
‘Himachal is not Congress’s or BJP’s’: Jai Ram Thakur
Leader of Opposition Jai Ram Thakur, who attended the meeting along with BJP state president Dr Rajiv Bindal and party MLAs, accused the government of politicising a serious fiscal issue.
“Himachal belongs to everyone—not Congress, not BJP, not the PMO, not the CBI,” Thakur said, asserting that the discussion must rise above partisan posturing and focus on people’s rights.
He criticised what he termed “wrong pride and wrong decisions” in projecting RDG as an entitlement without acknowledging that Finance Commissions had always treated it as a temporary, tapering support mechanism, not a permanent feature.
Past Finance Commission precedents cited
Thakur recalled that even under the Congress-led UPA government headed by Manmohan Singh, RDG was gradually reduced between 2010 and 2015—not abolished overnight.
He also pointed out that after Narendra Modi took office in 2014, Himachal received nearly ₹40,000 crore through Finance Commission awards, when the Congress was in power in the state. “No one then accused the Centre of discrimination,” he said.
“You cannot shut the refrigerator in one stroke,” Thakur remarked, warning against abrupt fiscal withdrawal without transition support for hill states.
State’s contradictions exposed
While all parties agreed—at least rhetorically—that RDG must continue, the meeting exposed deeper contradictions in Himachal’s fiscal conduct.
Analysts and officials privately acknowledge that while Himachal has legitimate claims over hydropower royalties, forest services, tourism externalities and horticulture-based revenues, the state has failed to convert these into robust, predictable income streams.
Equally troubling is the state’s ballooning committed expenditure:
-
A huge salary and pension bill
-
An oversized administrative apparatus, including 10 DGP-rank officers
-
Over 111 paid advocates, Additional Advocate Generals and Deputy Advocate Generals, Advisors, OSDs, chairpersons, directors and the like.
-
₹1,000 crore-plus pending court liabilities and arrears
Despite repeated promises, successive governments—across parties—have failed to decisively curb corruption in state sick undertakings or fully implement leak-proof Direct Benefit Transfer (DBT) systems.
Politics over planning
Congress legislators blamed the Union Budget for failing to cushion the RDG withdrawal, while BJP leaders countered that the grant was always front-loaded and that increased tax devolution offers the state room to reform—if it shows fiscal discipline.
Yet, no party presented a credible roadmap on cutting non-plan expenditure, restructuring loss-making undertakings, or rationalising manpower, underscoring what critics call a shared reluctance to take politically costly decisions while in power.
All eyes now on special session
With the budget session beginning February 16 and a special Assembly discussion on RDG expected, all eyes are now on what MLAs across parties actually say on the floor of the House.
Publicly, every party wants RDG restored. Privately, the question remains whether the same resolve will survive when the responsibility of governance—and hard fiscal reform—shifts to their side of the aisle.
For Himachal Pradesh, the challenge is no longer just about securing Central support, but about proving it can responsibly use that support—until it earns its due from water, forests, tourism and horticulture, instead of perpetually borrowing against the future.
