SHIMLA, 08.02.26-A presentation on State’s financial position and effects of abolition of Revenue Deficit Grant (RDG) was given by the Finance Department before the Chief Minister Thakur Sukhvinder Singh Sukhu, Deputy CM Mukesh Agnihotri, Speaker H.P. Vidhan Sabha Kuldeep Pathania, Cabinet Ministers, MLAs, Administrative Secretaries, Heads of Departments, the State Media besides others.

After the presentation, Chief Minister Thakur Sukhvinder Singh Sukhu said that the report of 16^th Finance Commission would have a long term impact on the economy of the state including the upcoming budget.

“Abolition of RDG is not the issue of a government, but it is a matter of the rights of the people of the State. We are ready to go to Delhi and meet the Prime Minister along with BJP MPs and MLAs to take up this issue. I think once the provision of RDG is gone, it will be difficult to reclaim the rights of the people", he remarked. We have also invited the BJP MLAs to attend this presentation, but unfortunately, they have not come. RDG for 17 States have been scrapped, but Himachal Pradesh is worst affected as 12.7 percent of the budget comes from RDG, which is second highest in the country. ”

The Chief Minister said that post GST regime, the tax collection growth has come down to around 8 percent which was 13 to 14 percent before the implementation of GST. Being Himachal Pradesh a producer State, the implementation of GST has adversely impacted the economy of the State as it is consumer based tax and Himachal Pradesh has only a population of 75 lakh. He said that the competency of imposing taxes has also been taken away after the GST regime. He said’ “that together we have to fight for the people of the State. He emphasized that the central government should at least ensure 50% royalty on the power projects who have repaid their entire loan and give all those power projects back to the State who have completed 40 years of commissioning.” He said that Rs. 4500 crore of BBMB arrears have not been given to the State since 2012 despite the Supreme Court verdict. We are also fighting a legal battle to get back the Shanan Power Project whose lease period is over with the Punjab Government.

He said that the State Government has envisioned making Himachal Pradesh a self reliant State and earnest efforts have been undertaken to realize this mission from the day one of assuming the power. He said that the State Government remains committed to further achieve the goal of resource mobilization. The State Government has earned a revenue of Rs. 26,683 crore from its own resources but this income generation was not enough, as we just have river waters and forests as a source of revenue apart from the tourism sector.

He said, "I assure the people of the State that we will implement every welfare scheme on the ground, we will increase the resources of the State and we will continue to fight for our legitimate rights."

Sh. Sukhu said that we have adopted policies for resource mobilization without transferring burden on the common man. He said that the State Government has raised the issue of open forest with the 16^th Finance Commission and it has accepted the share for it. Additionally, it has also agreed to allocate funds for disaster on account of landslides. Earlier, there was only provision to include drought and cyclone.

Earlier, Industries Minister Harshwadhan Chauhan said that a detailed presentation was also given before the Cabinet on the impact of the report of 16^th Finance Commission and it deliberated at length on the recommendation of this report. He said that the Finance Department has submitted only its suggestions to overcome the situation and the Cabinet will take final call in this regard.

During the presentation, the importance of RDG for the State was highlighted. While giving a detailed presentation, Principal Secretary Finance Devesh Kumar said that the Chief Minister met multiple times with the Chairman, Finance Commission and Union Finance Minister in this regard. He said that RDG was a constitutional provision under Article 275(1) and it was received by the State till 15^th Finance Commission. As per the Constitutional provision, the Finance Commission assesses the revenue and expenditure of the States. After deciding the devolution formula the allocation of the share in the central taxes is made and thereafter recommend any gap filling grant if the same exists. He said that the State's revenue for the year 2021 to 2026 was assessed Rs. 90760 crore and expenditure was assessed Rs. 1,70,930 crore. The deficit of Rs. 80170 crore was funded through assessed tax devolution of Rs. 35064 crore, Rs. 37199 crore as RDG and Rs. 9714 crore as other grants whereas, the 16^th Finance Commission did not assess any revenue and expenditure of individual States. He said that presently, State's own revenues are about 18000 crore and its committed expenditure is around Rs. 48000 crore, which will go in salaries, pensions, loan interest and principal repayment, subsidies, social security pensions etc.

He said that share in central taxes devolution is predicted at Rs. 13950 crore, after including borrowing of Rs. 10000 crore, the resources available with the State will be about Rs. 42000 crore. Due to the discontinuation of RDG, there is a resource constraint for meeting budgetary allocations.

Concluding, he said that there was a clear significant resource gap of about Rs. 6000 crore excluding developmental works, pending liabilities, state schemes etc for FY 2026-27. The suggestive measures as stated above cannot be done overnight or in a short span of time. Even if these measures and reforms about increasing revenue and decreasing expenditure are undertaken the resource gap will still exist and RDG has been a savior in this regard.

This is the very reason why hilly States like Himachal Pradesh were recognized and given Special Category Status. Himachal Pradesh was formed on the aspiration of the public and not as a financially viable unit. Impact of the recommendations is not confined to the incumbent Government but will adversely affect subsequent Governments and will be grave injustice with the people of the State.