New Delhi — Himachal Pradesh Chief Minister Thakur Sukhvinder Singh Sukhu has sought additional financial assistance from the Centre, citing the state’s difficult geographical conditions, high infrastructure costs and the growing pressure on its finances following the discontinuation of the Revenue Deficit Grant from the current financial year.
Sukhu raised the issue during a meeting with Union Finance and Corporate Affairs Minister Nirmala Sitharaman in New Delhi on Monday, where he presented the state’s financial position and urged the Union government to provide greater fiscal support to Himachal Pradesh.
A key demand raised by the Chief Minister was an increase in the state’s borrowing limit from the existing three per cent to four per cent of its Gross State Domestic Product (GSDP). Sukhu argued that additional borrowing space would provide the state with greater fiscal flexibility to meet committed liabilities while continuing to fund essential public services and development priorities.
The Chief Minister said Himachal Pradesh was facing an annual financial gap of around Rs 8,000 crore following the discontinuation of the Revenue Deficit Grant from 2026-27 under the recommendations of the 16th Finance Commission. He said the gradual reduction in the grant over the past several years had placed increasing pressure on the state’s finances.
Sukhu stressed that Himachal’s financial situation could not be viewed in isolation from its geographical realities. As a hill state, Himachal Pradesh faces difficult terrain, higher costs for building and maintaining infrastructure and considerable vulnerability to natural disasters. These factors, he argued, make the delivery of public services significantly more expensive than in many other states.
The Chief Minister also highlighted the substantial losses suffered by Himachal Pradesh in recent natural disasters and said the state needed additional assistance to cope with the financial consequences while maintaining its development trajectory.
Another major demand concerned the Special Assistance to States for Capital Investment (SASCI) scheme. Sukhu requested that supply and vendor payments under the scheme be exempted from the SNA-SPARSH model, arguing that such flexibility would help the state implement capital investment projects more effectively.
He also sought an increase in assistance under Externally Aided Projects (EAPs), asking the Centre to consider doubling the allocation for Himachal Pradesh. The demand, he said, was justified by the state’s difficult terrain, higher infrastructure costs and its developmental requirements.
Despite the financial constraints, Sukhu told the Union Finance Minister that his government was taking measures to strengthen the state’s finances through revenue-generation initiatives and financial reforms.
He also highlighted efforts to strengthen Himachal Pradesh’s rural economy and increase household incomes. Among the measures cited was the state’s decision to provide a Minimum Support Price for crops produced through natural farming. Sukhu said Himachal Pradesh had become the first state in the country to introduce such an MSP, with the objective of providing better returns to farmers and strengthening rural incomes.
The meeting also produced an indication of possible support from the Centre. Sitharaman assured Sukhu that the demands raised by the Himachal Pradesh government would be considered sympathetically in view of the state’s financial requirements and development priorities.
The Union Finance Minister also assured the Chief Minister that additional financial assistance under Special Central Assistance for Himachal Pradesh would be considered. Such support, she said, could help the state meet its development needs and strengthen its financial position.
The meeting comes at a crucial point for Himachal Pradesh, where the state government is attempting to balance fiscal consolidation with the need to maintain public services and finance development in a geographically challenging environment.
For Sukhu, the Centre’s response will be important as his government seeks additional fiscal space at a time when the withdrawal of the Revenue Deficit Grant has created a significant gap in the state’s finances. His demand for a higher borrowing limit and greater central assistance reflects the wider challenge facing Himachal Pradesh: maintaining development spending while managing mounting fiscal pressures.
Chief Secretary Kamlesh Kumar Pant, Principal Advisor to the Chief Minister Ram Subhag Singh, Principal Secretary (Finance) Devesh Kumar, Secretary to the Chief Minister Rakesh Kanwar and Principal Resident Commissioner Ajay Kumar, along with senior officials of the Union Finance Ministry, attended the meeting.
