Fund Crunch from Centre Impeding Himachal’s Growth and Climate Preparedness: HP CM Sukhu

Himachal Pradesh Chief Minister Sukhwinder Singh Sukhu says the centre is systematically squeezing Himachal Pradesh of funds, making it increasingly difficult for the hill state to sustain development and invest in climate resilience infrastructure, guarding the people against frequent disasters and natural calamities.

The rationalisation of the Goods and Services Tax (GST) has had a significant fiscal impact on Himachal Pradesh, a state heavily dependent on central transfers and its share of taxes.

GST, VAT, and Revenue Deficit in HP

“Can you imagine Himachal Pradesh’s GST collections have dipped by 17 per cent, the highest in the country, much higher than BJP-ruled states like Madhya Pradesh (-5 pc) and Rajasthan (-3 per cent) only?” The chief minister told Ashwani Sharma of Outlook in Shimla.

For a state that had historically relied primarily on central grants, the reduced share of taxes, scrapping of VAT, and a drastic cut in the Revenue Deficit Grant (RDG) have forced the state itself to fend for itself in the absence of the rightful inflow of funds.

Himachal Pradesh, during the earlier BJP regime, had earned substantial revenue through state-level taxes and Value Added Tax (VAT) on goods such as liquor, petroleum products, and certain services. But now the picture is grim.

“In 2020–21, Himachal Pradesh received a Revenue Deficit Grant of Rs 10,249 crore, which has drastically been cut down to Rs 3,257 crore in 2025–26. The GST rationalisation is expected to impact the state’s finances by nearly 17 per cent, leading to an estimated loss of Rs 600 crore. With the annual borrowing limit also capped at 3 per cent of the Gross State Domestic Product (GSDP), the state finds itself in a very difficult situation,” says the Chief Minister.

Natural Disasters And Climate Change-Induced Losses In HP

According to him, during a recent meeting with Union Finance Minister Nirmala Sitharaman, all the facts were presented to her. The state requested permission to allow an additional two per cent borrowing to tide over the current crisis.

“We have also drawn the centre’s attention to the colossal losses Himachal Pradesh has suffered in recent natural calamities and the extensive damage to its infrastructure. Our estimates place the total loss at around Rs 15,000 crore, and we have urged the centre to extend liberal financial assistance to the state.” The Chief Minister was informed.

He added, "The tragedy is that as a small state, our voice goes unheard. Our own BJP MPs have chosen silence instead of standing with the people when Himachal needs them the most."

Prime Minister Narendra Modi, who had visited the state to assess the losses, has indeed announced a help of Rs 1,500 crore.

Sukhu admits that Himachal Pradesh, along with the adjoining states of Uttarakhand and Jammu and Kashmir, has become increasingly vulnerable to disasters, the intensity and frequency of which are increasing each year. The state, on its own, is trying to minimise its impact on the human population and also on infrastructure.

“Our studies clearly indicate that climate change is a major factor behind the increasing frequency of such extreme weather events. There is an urgent need to develop climate-resilient infrastructure and adopt technologies suited to mountainous regions. I am sure the Central government and NITI Aayog are seriously addressing these concerns of the Himalayan states,” he laments.

Asked if he was worried over the mounting debt burden of the state (exceeding Rs one lakh crores) and the state coffers having already dried up, the chief minister said, “Of course, it is a worrying situation. But, as Chief Minister, it’s my responsibility to oversee all capital investments and revenue services, also look after the welfare of people, and mobilise resources.”

Hydro Power

He claims that during the three years of the government, he has been able to mobilise additional income of Rs 3000 cr. This is the first time any government has taken this step. Further, the government has strived hard to get its rightful share in the hydropower projects.

In one case, the Supreme Court has also upheld the government's move to secure a higher share of free power from the Karcham-Wangtoo Project (1,045 MW), which amounts to 18 per cent. The state government has taken control of the luxury five-star resort, Wildflower Hall, which was managed by the Oberoi group. The state government will get an annual revenue of Rs 401 crore from the property.

Furthermore, the government has initiated action to reclaim three mega hydel projects, which were handed over to Satluj Jal Vidyut Nigam Limited (SJVN), unless certain terms favourable to the state, including a higher share of free power, are accepted by the Union Ministry of Power. “I have already given an ultimatum to Union Minister of Power Manohar Lal Khattar,” he said.

Poll Promises Forgotten?

But what about the poll guarantees and job promises? The opposition BJP accuses the government of failing to deliver the promised Rs 1,500 monthly allowance to women in a cash-strapped state. Additionally, they also lied during the Bihar polls about this promise.

The Chief Minister counters, “We’ve already begun disbursing Rs 1,500 per month to women. Rest assured, every promise made will be fulfilled before the next elections.”

HP’s Unique Work-Experiment

Asked if he would clarify why there is currently no regular chief secretary, DGP, or principal chief conservator of forests in the state, or if, with all three positions held by senior IAS, IPS and IFS officers with an additional charge, it presented a unique situation in the administration, the CM replied:

“It’s temporary, and I’ll address it soon. We haven’t taken any IAS officers this year, and the IFS cadre is down from 110 to 86. A small state doesn’t need a top-heavy setup—we’re cutting posts across departments and PSUs to reduce costs.

Drug Trafficking In Himachal Pradesh

To the question of whether the state is facing a serious problem of drug trafficking and "Chitta"—a highly addictive and deadly substance—among youths and teenagers. There have been several overdose deaths.

"We are committed to wiping out this menace from the state. There are multiple actions underway. Soon, on November 15, I will be launching an extensive "anti-Chitta" drive in Shimla, which will cover the entire state. I will not mind putting all the drug mafias and Chitta smugglers in jail and demolishing their ill-gotten properties," the CM announced.