Hamirpur: Veteran BJP leader and former Himachal Pradesh Chief Minister Prof. Prem Kumar Dhumal has entered the ongoing debate over the stopping of the Revenue Deficit Grant (RDG), expressing serious concern over the state’s financial situation. He said the present fiscal stress is not sudden but the outcome of long-foreseen challenges that the government failed to address in time.
Prof. Dhumal said the withdrawal of the Revenue Deficit Grant was neither sudden nor unexpected. It was clearly laid down in the Finance Commission’s recommendations that the grant would be phased out and would end after March 31, 2026. Despite having years to prepare, the state government failed to put in place alternative revenue-generation mechanisms or a credible financial roadmap. Projecting the RDG phase-out as a fresh shock to the state’s economy is misleading, he said.
He reminded that implementing the Finance Commission’s recommendations is a constitutional obligation of the Central Government. Instead of fuelling a political narrative or shifting blame, the state government should explain why it did not use the available time to strengthen its financial position. According to him, lack of preparedness is at the core of the present crisis.
Drawing on his experience as Chief Minister, Prof. Dhumal said that resource-poor hill states often face financial stress, but responsible governments respond with tough, sometimes unpopular decisions. During difficult phases, his government imposed strict fiscal discipline, curtailed discretionary spending, cut down on unnecessary official travel, and reduced avoidable luxuries. He said the leadership ensured that austerity began from the top and no avoidable burden was placed on the state exchequer.
He also pointed to structural reforms undertaken during his tenure to improve the state’s revenue base. Strengthening agriculture and horticulture was a key focus, with special emphasis on vegetable production and marketing. This, he said, increased annual turnover from around ₹250 crore to nearly ₹2,250 crore. When apple production declined, diversification into alternative crops helped compensate losses and contributed to better revenue generation and budgetary stability.
Taking a dig at the present government, Prof. Dhumal said the claims of financial distress stand in stark contrast to the expansion of political appointments. He said the appointment of chairpersons, advisors, and other office-bearers has led to rising expenditure on vehicles, staff, and official facilities. If the financial situation is as grave as projected, the government’s first move should be to stop non-essential spending, he asserted.
On Centre–State relations, Prof. Dhumal said the public deserves facts, not political messaging. He said Himachal Pradesh has consistently received special support whenever the BJP was in power at the Centre, including industrial packages and benefits linked to special category status. Economic challenges, he said, cannot be resolved by speeches or confrontation but by sound policy decisions, honest resource mobilisation, and tight control over expenditure.
He also cautioned against repeated public statements suggesting that the state treasury is empty, saying such assertions erode public confidence and create unnecessary anxiety. What is required, he said, is decisive action — a thorough review of spending, clear prioritisation of development works, and disciplined financial management.
Meanwhile, Chief Minister Sukhvinder Singh Sukhu has maintained that the phasing out of the Revenue Deficit Grant has put immense pressure on the state’s finances. He has said the present government inherited a fragile financial situation and is struggling with reduced central assistance and mounting liabilities. The Chief Minister has repeatedly urged the Centre to continue financial support for hill states, while asserting that his government is taking steps to increase revenue and rationalise expenditure to stabilise Himachal Pradesh’s economy.
