New Delhi, March 2 Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu met with Union Finance Minister Nirmala Sitharaman here on Monday and requested a financial package under special central assistance to cover the revenue deficit for the 2026-27 fiscal year.
This development comes nearly two weeks after the Himachal Pradesh Assembly passed a resolution on February 18 to restore the Centre's Revenue Deficit Grant (RDG) to the state.
During the meeting, Chief Minister Sukhu also requested the Union finance minister to form a committee to properly assess the economies of hill states and recommend corrective measures.
The chief minister told the finance minister that the discontinuation of RDG will have far-reaching adverse effects on the financial health of Himachal Pradesh, adding that the hill state cannot be compared to other states whose RDG has been discontinued, according to a state government statement.
Sukhu said that RDG contribution for the state was about 12.7 per cent, which was the second highest after Nagaland. He said that larger states can withstand the discontinuation, but the economy of Himachal Pradesh cannot.
Assessing all states on a single yardstick is neither healthy nor transparent, he said.
He termed the discontinuation as "undermining the spirit of cooperative federalism".
The chief minister said that Article 275(1) of the Constitution of India provides for such grants to the states which cannot bridge the gap between their revenue receipts and expenditure.
He said that this was for the first time that the Finance Commission has totally ignored the developmental needs of small hill states.
The chief minister informed Sitharaman that in the last two-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 cess.
Sukhu claimed that Himachal suffered revenue losses due to GST, and added that despite raising tax rates wherever feasible and rationalizing subsidies, the revenue deficit gap could not be bridged.
The resolution passed by the assembly noted that following recommendations of the 16th Finance Commission, the central government has discontinued the RDG from the next financial year for 17 states, including Himachal Pradesh.
During the discussion on RDG in the state assembly, Chief Minister Sukhu had said under Articles 275 and 280 of the Constitution, the RDG is a right of Himachal Pradesh and its people.
He had announced that the cabinet, in contravention of protocols, was ready to meet Prime Minister Narendra Modi under the leadership of Leader of Opposition (LoP) Jairam Thakur to seek the reinstatement of RDG.
Alleging that the BJP engages in politics and not service, he had urged the Centre to restore the RDG, and said that if they don't, future generations will not forgive them.
