Himachal To Explore Legal Options, Revenue Deficit Grant Not  charity, It's A Right: CM Sukhu

Faced with the gravest financial blow following the Centre’s decision to discontinue the ‘Revenue Deficit Grant’ (RDG), Himachal Pradesh Chief Minister Sukhwinder Singh Sukhu has hinted at exploring legal options and fighting out “injustice,” terming the move as arbitrary, unjustified, and detrimental to the state’s fiscal stability.

Sukhu has also called Sunday a “black day” in Himachal Pradesh’s history when the centre accepted the 16^th Finance Commission report and ‘sealed’ the future of the hill state, also a special category state entitled to the centre’s funding to sustain its economy. 

“The 16th Finance Commission has discontinued the RDG. It is a massive blow to the people of Himachal. We are deeply hurt by the blatant injustice and insensitivity of the centre towards us. It is the first time in history since 1951--when first Finance Commission was set up by the centre , the hill state has been ill-treated,” Sukhu said.

He said the matter would be discussed in the Cabinet, and all options, including legal recourse, would be explored.

As a result of this unilateral decision, debt-ridden and resource-starved Himachal Pradesh may be pushed to the brink, staring at a staggering loss of Rs 50,000 crore, an assault that could cripple the state’s ability to deliver even the most basic governance to its people, Sukhu explained here on Monday.

The Himachal Pradesh had received around Rs 48,000 crore as RDG over the past five years under the 15th Finance Commission and was expecting nearly Rs 50,000 crore in the next cycle.

 “I met the Finance Commission Chairman Dr. Arvind Panagariya more than once and also submitted all details to Union Finance Minister Nirmala Sitharaman several times. I also made a request to Prime Minister Narendra Modi to help Himachal Pradesh, a state he calls his second home,” the chief minister recalled.

He admitted that the decision came as a shock, asserting that there was no prior indication of such an abrupt move. Sukhu says the withdrawal of the RDG was nothing short of nightmarish for the state.

‘RDG is not charity.’

Quoting Article 275(1) of the Constitution, Sukhu said RDG was a state-specific entitlement extended consistently since 1952.  It’s neither a charity nor a dole. It’s a state’s right and can’t be overlooked like this.

He cautioned that the absence of RDG would constrain essential public services, strain fiscal sustainability, and force hard choices between service delivery and higher indebtedness.

During last five years of the 15^th finance commission, the state had received a grant of Rs 38,000 cr. Now, the decision to end RDG has come at a time when the state has already been jolted by the Centre’s decision about replacing VAT with GST—a straight annual loss of Rs 9,000 cr. The salary and pension bill of Himachal Pradesh is nearly Rs 2300 cr. It’s debt burden has crossed Rs 90,000 cr.

On another point, Sukhu said Himachal Pradesh acts as the lungs of northern India through its forests, provides water to neighbouring states and resources for power generation by central companies. Receiving nothing in return is total injustice

“We protect the forests, preserve the rivers, and provide clean air to entire north plains, yet others reap the benefits. All we are left with are disasters and natural calamities. Our people are rendered homeless and landless, and we lack even the authority to resettle families devastated by floods, landslides, and cloudbursts because the power to permit the use of even a single inch of forest land rests with the Centre,” he alleged.

When Himachal Pradesh was not a developed state, literacy was low , large public sector giants such as NHPC, NTPC, and the Bhakra Beas Management Board came and set up projects exploiting its natural resources -- water and land  -- while displacing locals. They became landless in their own homeland. This was all in the name of development and profit. Himachal Pradesh is still living with the pain of displacement and submergence.

Now, even the Revenue Deficit Grant is being denied at a time when the state is already fighting a tough battle to secure its legitimate share in hydropower projects. “I am not going to leave it here like this. It’s a new battle now for the state's rights,” he declares.

Sukhu regrets that the state’s demand for a green fund of Rs 50,000 cr for the hill states as ecological services has also been ignored.

Criticising the Union Budget, Sukhu termed it anti-poor and anti-farmer, alleging neglect of unemployment, inflation, and rural distress. He said apple growers had been ignored, the rail expansion demand overlooked, and tourism infrastructure left unaddressed. “While a Buddhist Circuit has been proposed for the Northeast, Himachal’s Buddhist Circuit should also have been included,” he said.

Deputy Chief Minister Mukesh Agnihotri  also mounted a fierce attack against the Centre describing the move as a "long-term crisis" rather than a temporary setback.

Himachal faces more than Rs. 10,000 crore in annual loss due to the 16th Finance Commission's recommendation, says Agnihotri, and accuses sitting BJP MPs of betrayal to the state’s interests.

“Neglect of Himachal in the Union Budget is unfortunate. Ending the revenue deficit grant despite repeated disaster losses worsens the state’s fragile finances. Reduced central support is unjustified when the situation demands stronger assistance,” said Vikramaditya Singh, the state’s Public Works and Urban Development Minister