10,000 Crore Annual Loss to Himachal
Shimla: Himachal Pradesh Deputy Chief Minister Mukesh Agnihotri has strongly criticized the Union Budget and the recommendations of the 16th Finance Commission, claiming that the state is set to suffer an annual financial loss of nearly ₹10,000 crore.
Reacting sharply, Agnihotri stated that the impact of these decisions is not temporary but a long-term financial crisis that would weaken the state’s fiscal structure. “This is unacceptable to Himachal Pradesh under any circumstances,” he said.
GST and RDG: ‘A Double Blow’
The Deputy Chief Minister remarked that the Goods and Services Tax (GST) system has already proven detrimental for hill states like Himachal Pradesh, which have limited revenue resources. He said the state faced a major economic setback after the discontinuation of GST compensation. Now, the abolition of the Revenue Deficit Grant (RDG) has dealt a second severe blow.
Calling the move unjustified, Agnihotri emphasized that the state had received nearly ₹38,000 crore as RDG over the past five years. Given the current economic challenges, the expectation was that this assistance would increase to around ₹50,000 crore. Instead, the grant has been scrapped, creating serious financial strain.
Impact on State Finances
He pointed out that Himachal Pradesh’s total annual budget stands at approximately ₹58,000 crore, with a substantial portion allocated to salaries, pensions, and essential expenditures. Any reduction in central assistance, he warned, would directly affect development projects and public welfare schemes.
Constitutional and Federal Concerns
Agnihotri said that at the time of Himachal’s formation, it was acknowledged that due to its difficult geographical terrain and limited economic base, the state would require special financial assistance from the Centre. Such support, he argued, was part of a constitutional understanding and national consensus.
He further noted that since 1952, the Central Government has maintained a tradition of extending special financial support to Himachal Pradesh, with RDG serving as its institutional framework. Abolishing it, he said, amounts to policy injustice and undermines the spirit of cooperative federalism.
According to him, larger states possess diverse revenue sources, whereas hill and northeastern states depend significantly on central grants. Eliminating RDG, therefore, disproportionately impacts states with special geographical and economic conditions.
Questions for BJP Leadership
The Deputy Chief Minister also questioned the silence of the state’s seven BJP MPs and Leader of Opposition and former Chief Minister Jai Ram Thakur, asking whether they stand with the Centre or with the interests of Himachal Pradesh.
He asserted that remaining silent on an issue involving an annual loss exceeding ₹10,000 crore amounts to compromising the state’s interests, adding that the people of Himachal will seek accountability.
