Himachal Pradesh’s share in central tax devolution has increased under the 16th Finance Commission, and claims of financial loss are aimed at creating panic, former Union Minister and Hamirpur MP Anurag Singh Thakur said on Monday.
Citing data from the 16th Finance Commission report, Thakur said the Congress-led state government was misleading people over the discontinuation of the Revenue Deficit Grant (RDG) instead of addressing its own financial mismanagement. He said the Centre continues to provide adequate financial support to Himachal Pradesh.
Thakur said that under the new devolution formula, Himachal’s share in the divisible pool has risen from 0.830 percent under the 15th Finance Commission to 0.914 percent under the 16th Finance Commission. As a result, the state’s post-devolution receipts have increased from around Rs. 11,561.66 crore in the 2025–26 Budget Estimates to Rs. 13,949.97 crore, reflecting an increase of approximately Rs. 2,388 crore.
He clarified that the Revenue Deficit Grant was never intended to be a permanent arrangement and was introduced as a time-bound measure to help states overcome fiscal stress, particularly in the aftermath of the COVID-19 pandemic. He said the 16th Finance Commission reviewed the impact of RDG and concluded that continuation of a general revenue deficit grant was undesirable.
Thakur said despite substantial RDG transfers under the 14th and 15th Finance Commissions, several states, including Himachal Pradesh, did not strengthen tax collection or rationalise expenditure. He said continuing RDG in such circumstances could encourage fiscal indiscipline and delay structural reforms.
Rejecting allegations of political bias, Thakur said the revised formula of the 16th Finance Commission has benefited several opposition-ruled states as well. He said changes in weightage, including higher emphasis on demographic performance and contribution to GDP, were applied uniformly and were not driven by political considerations.
Comparing Himachal Pradesh with Uttarakhand, Thakur said fiscal indicators clearly explain the Finance Commission’s approach. He said Himachal’s own tax revenue stood at around 5.6 percent of GSDP in 2023–24, lower than Uttarakhand’s 6.1 percent. He added that Himachal’s revenue expenditure was significantly higher, leaving limited fiscal space for development.
Thakur said Himachal also recorded higher fiscal and revenue deficits and carried a heavier debt burden compared to Uttarakhand, increasing pressure on interest payments and reducing financial flexibility. He said such structural weaknesses cannot be addressed by continuing grants that mask underlying problems.
He said the Congress government should focus on improving revenue mobilisation, controlling expenditure and strengthening fiscal discipline instead of blaming the Centre. Thakur said creating panic over Finance Commission recommendations would not serve the interests of the state or its people.
