Himachal Pradesh chief minister Sukhvinder Singh Sukhu met Union finance minister Nirmala Sitharaman in New Delhi on Monday, warning of an “imminent fiscal collapse” after the 16th Finance Commission scrapped the Revenue Deficit Grant (RDG) for 2026–31. The move is expected to strip the state of nearly 25% of its revenue receipts, prompting the CM to seek an urgent financial package under special central assistance.
Green bonus and constitutional appeals
To counter the resource gap, Sukhu demanded a first-of-its-kind annual ₹50,000 crore ‘Green Bonus’ as compensation for preserving 67% forest cover at the cost of industrial growth. Invoking Article 275(1) of the Constitution, he argued that discontinuing the RDG—which accounts for 12.7% of the state’s revenue, the second highest in India after Nagaland—undermines “cooperative federalism.” Sukhu emphasized that assessing small hill states on the same yardstick as large economies is neither healthy nor transparent, noting that this is the first time a Finance Commission has entirely ignored the developmental needs of such regions.
Fiscal measures and federal support
The CM apprised the FM of the state’s internal efforts to reduce expenditure, including raising ₹600 crore annually through various cesses and avoiding off-budget borrowings.
Despite rationalising subsidies and raising tax rates, Sukhu said that the gap created by GST-related losses and the RDG withdrawal cannot be bridged internally. He requested the constitution of a committee to specifically assess the economies of hill states.
{{/usCountry}}Despite rationalising subsidies and raising tax rates, Sukhu said that the gap created by GST-related losses and the RDG withdrawal cannot be bridged internally. He requested the constitution of a committee to specifically assess the economies of hill states.
{{/usCountry}}Officials privy to the discussion described the meeting as positive, stating that Sitharaman was “considerate to the state’s financial concerns” and assured sympathetic consideration of the demands.