Himachal seeks special package to offset revenue deficit

Chief Minister Sukhvinder Singh Sukhu met Union Finance Minister Nirmala Sitharaman in New Delhi on Monday, urging the Centre to extend a special financial package to bridge Himachal Pradesh’s projected revenue deficit for 2026-27.

Sukhu warned that the discontinuation of the Revenue Deficit Grant (RDG) would severely strain the state’s finances. He pointed out that RDG accounted for nearly 12.7 per cent of Himachal’s total revenue, second only to Nagaland, arguing that hill states cannot be assessed on the same parameters as larger, more economically resilient states. Applying a uniform yardstick, he said, ignores geographical and structural disadvantages unique to smaller states.

Calling the move contrary to the spirit of cooperative federalism, the CM cited Article 275(1), which provides for grants to states unable to bridge gaps between revenue receipts and expenditure. He maintained that the Finance Commission’s approach overlooked the developmental needs of small hill states for the first time.

Sukhu informed Sitharaman that the state had adopted fiscal discipline over the past two to three years, avoided off-budget borrowings, curtailed expenditure and mobilised nearly Rs 600 crore annually through various cesses. Despite increasing tax rates where feasible and rationalising subsidies, he said the widening revenue deficit, exacerbated by GST-related losses, remains unmanageable without central support.

He urged the Centre to constitute a dedicated committee to assess the economic realities of hill states and recommend corrective measures. Sitharaman assured him that the state’s concerns would receive sympathetic consideration.