In a scathing and emotionally charged response to the Union Budget 2026–27, Himachal Pradesh Chief Minister Thakur Sukhvinder Singh Sukhu has accused the Centre of turning a blind eye to the struggles, aspirations and structural realities of hill states, calling the budget a *“labyrinth of neglect”* that shatters the hopes of the people of Himachal Pradesh.
The Chief Minister’s criticism goes far beyond routine political disagreement. At the heart of his concern lies what he describes as a deep fiscal injustice inflicted upon smaller and special category states—particularly Himachal Pradesh—through the recommendations of the 16th Finance Commission (2026–31). According to CM Sukhu, the complete discontinuation of Revenue Deficit Grants (RDGs) marks a historic and troubling break from constitutional and fiscal precedent.
### A Historic Break from Constitutional Support
CM Sukhu reminded that Article 275(1) of the Constitution mandates state-specific grants to bridge revenue deficits—support that has been consistently extended since 1952 up to the Fifteenth Finance Commission. Even during the transition period between the Fourteenth and Fifteenth Finance Commissions, Himachal Pradesh received interim assistance worth ₹11,431 crore. Under the Fifteenth Finance Commission alone, the state was granted nearly ₹37,000 crore as RDGs.
“For the first time in India’s fiscal history, the Sixteenth Finance Commission has completely withdrawn Revenue Deficit Grants, even for small and hill states,” the Chief Minister said, terming it an act that not only undermines cooperative federalism but also hurts the sentiments of the people of Himachal Pradesh.
### Ignoring Ground Realities of a Hill State
CM Sukhu underscored that the decision blatantly ignores Himachal Pradesh’s structural handicaps—67 percent forest and ecological cover, high per-capita cost of service delivery in mountainous terrain, and repeated natural disasters that have caused losses exceeding ₹15,000 crore in recent years. These are not temporary challenges, he stressed, but permanent realities that demand sustained central support.
The state had hoped the Union Budget would acknowledge hill-specific needs such as hydropower development, eco-tourism, disaster-resilient infrastructure, improved road and rail connectivity, and compensation for GST-related revenue losses. Instead, Sukhu said, the absence of RDGs will severely restrict the state’s ability to deliver essential public services, maintain fiscal stability and invest in future growth—potentially forcing painful trade-offs between welfare and mounting debt.
### Farmers, Apple Growers and the Poor Left Behind
Calling the budget anti-poor and anti-farmer, CM Sukhu expressed deep disappointment over the complete neglect of Himachal’s apple economy—worth around ₹5,000 crore annually and supporting thousands of families. “There is not even a mention of apple growers, despite their crucial contribution to the state’s economy,” he said.
He further pointed out that the budget fails to address chronic issues plaguing agriculture nationwide, including inadequate minimum support prices, lack of investment in modernization, infrastructure and advanced farming practices. According to him, the budget appears tilted in favour of the affluent, while common citizens continue to struggle with unemployment, poverty and rising prices.
### Railways, Tourism and Borrowing Limits: Missed Opportunities
The Chief Minister also flagged the continued neglect of railway expansion in Himachal Pradesh. No allocations have been made for key projects such as the Bhanupali–Bilaspur and Baddi–Chandigarh lines, despite long-standing demands. Equally disappointing, he said, is the Centre’s refusal to raise the state’s borrowing limit from 3 percent to 4 percent, a move that could have provided much-needed fiscal breathing space.
Tourism, another backbone of Himachal’s economy, has also been overlooked. Despite being home to world-renowned destinations, the budget makes no specific provisions for tourism infrastructure in the state. While a Buddhist Circuit has been announced for the northeastern states, the equally significant Buddhist heritage of Himachal Pradesh has been ignored, Sukhu noted.
### Capital Push Without Hill Sensitivity
CM Sukhu acknowledged the Union Budget’s emphasis on capital investment but stressed that hill states require special provisions—higher central assistance for disaster-resilient infrastructure, climate adaptation, hydropower and road connectivity. He advocated for greater flexibility in centrally sponsored schemes, higher weightage to ecological indicators in fiscal devolution and the creation of a separate Disaster Risk Index for Himalayan states to strengthen true cooperative federalism.
He also criticized the unchanged ₹1.5 lakh crore cap on interest-free loans to states, saying the stringent conditions attached to the scheme disproportionately disadvantage smaller states with higher cost structures. The discontinuation of GST compensation, he added, has already resulted in significant annual revenue losses for Himachal Pradesh.
### A Call for Federal Fairness
As a special category hill state with fragile ecology, frequent natural disasters and a limited own-revenue base, Himachal Pradesh cannot be treated on par with plains states, CM Sukhu asserted. Stronger fiscal support and a clear framework for continuing RDGs beyond the current Finance Commission period are, he said, essential to protect fiscal balance, public services and social welfare commitments.
Reaffirming his government’s commitment to fiscal prudence, better revenue mobilization and efficient governance, the Chief Minister made a strong appeal to the Union Government for constructive and continuous dialogue. “Inclusive, region-balanced and truly federal growth is possible only when the aspirations and constraints of hill states are genuinely integrated into India’s development journey,” he said.
For the people of Himachal Pradesh, the message from Shimla is clear: the budget carried high hopes—but for this hill state, those hopes now stand shattered.
