Sukhu to meet Planning Commission chief, seek higher fund allocation
Himachal will submit an additional memorandum to the Finance Commission on May 23 to seek a higher financial allocation based on three new formulas. Chief Minister Sukhvinder Singh Sukhu will personally meet Dr Arvind Panagariya, Chairman of the Finance Commission, in New Delhi on May 23 to seek enhanced allocation of funds. Though the government had submitted a memorandum to the 16th Finance Commission during its visit to the state on June 25, 2024, the Chief Minister was now keen to plead its case for a higher allocation of funds.
Sources said that the Chief Minister would lead a delegation to request Panagariya for a higher allocation of funds. “At present, the Finance Commission makes devolution of funds based on the data of 28 per cent forest cover in Himachal Pradesh while 68 per cent of the state’s total area is forest. If this argument is accepted, the devolution of funds can go up considerably from the present 0.8 per cent,” said an official.
The Indian Institute of Forest Management, Hyderabad, on the request of the Himachal Government has assessed the value of ecological services that the country gets from forests in the state. Himachal has based its demand for higher allocation of funds on this report.
The Chief Minister is also very keen that Himachal should be adequately compensated for the loss of the Goods and Services Tax (GST), which has come down from Rs 10,000 crore in 2020-21 to mere Rs 3,200 crore in 2025-26. Himachal was getting almost Rs 3,000 crore from Value Added Tax (VAT), which has now come down to mere Rs 150 crore, leaving a big revenue gap for Himachal. “As Himachal is not a big consumer state, it has been making revenue loss with the start of the GST regime. As such, small states like us must be adequately compensated,” said the official.
Sukhu is also insisting that the Revenue Deficit Grant (RDG) for Himachal should be fixed and should not be reduced. The argument being given for it is that Himachal was given statehood on political and cultural considerations, knowing very well that it would not be a financially viable or a self-sustaining state.
The argument now being given is that considering its rugged and tough topography and very limited revenue generating resources in the absence of mineral deposits or a flourishing industry, a different yardstick for deciding the RDG for Himachal must be worked out.
Himachal’a annual budget is about Rs 58,000 crore and the Chief Minister is keen that with all these arguments, a hike of Rs 8,000 crore to Rs 10,000 crore in fund allocation will be a major relief for the state.
To argue for fixed Revenue Deficit Grant
- At present, the Finance Commission makes devolution of funds based on the data of 28 per cent forest cover in Himachal Pradesh but the Chief Minister will impress upon it that 68 per cent of the state’s total area is under forest
- Sukhu is keen that Himachal should be adequately compensated for the loss of the GST, which has come down from Rs 10,000 crore in 2020-21 to Rs 3,200 crore in 2025-26
- He is also insisting that the Revenue Deficit Grant for Himachal should be fixed and should not be reduced
