Himachal Pradesh Chief Minister Thakur Sukhvinder Singh Sukhu met Union Finance Minister Nirmala Sitharaman in New Delhi to seek a special financial package for the financial year 2026–27, urging the Centre to provide support to offset the state’s anticipated revenue deficit. During the meeting, the Chief Minister emphasized that the withdrawal of the Revenue Deficit Grant (RDG) would have serious implications for the state’s fiscal stability.
He informed the Union Finance Minister that Himachal Pradesh’s dependence on RDG has been significant, accounting for approximately 12.7 percent of the state’s revenue composition—second only to Nagaland. He argued that comparing smaller hill states with larger and more industrialized states on the same financial parameters is neither equitable nor practical. According to him, while larger states may have the capacity to absorb the impact of discontinuation, Himachal Pradesh’s economy does not have similar resilience.
Describing the move as contrary to the principles of cooperative federalism, the Chief Minister referred to Article 275(1) of the Constitution of India, which provides for grants-in-aid to states facing a gap between revenue receipts and expenditure. He noted that this was the first instance in which the Finance Commission had, in his view, overlooked the specific developmental requirements of small hill states.
Shri Sukhu highlighted that over the past two to three years, the state government has implemented several fiscal reforms to improve financial discipline. He stated that Himachal Pradesh has avoided off-budget borrowings and has generated nearly Rs 600 crore annually through various cess mechanisms. Despite these measures, along with rationalizing subsidies and revising tax rates wherever feasible, the state continues to face challenges in bridging the revenue deficit. He also pointed out that the implementation of GST had resulted in revenue losses for the state.
The Chief Minister requested the Union Finance Minister to consider setting up a dedicated committee to examine the unique economic structure of hill states and recommend tailored policy measures to address their financial constraints.
Union Finance Minister Nirmala Sitharaman assured the Chief Minister that the concerns and demands presented by the state would be given sympathetic consideration.
The Chief Minister was accompanied during the meeting by Principal Advisor Ram Subhag Singh and Principal Secretary (Finance) Devesh Kumar.
