Himachal Pradesh will face an annual financial loss of more than Rs. 10,000 crore due to the recommendations of the 16th Finance Commission, Deputy Chief Minister Mukesh Agnihotri said while attacking the Union Government’s budgetary decisions.
Calling the impact severe and long-term, Agnihotri said the Centre’s approach has weakened the state’s financial structure and pushed Himachal towards a sustained fiscal crisis. He said the loss was not a one-time setback but a recurring blow that would affect the state’s development capacity every year.
The Deputy Chief Minister described the situation as a “double blow” to the state economy. He said Himachal had already suffered after the withdrawal of GST compensation, which had earlier supported states with limited revenue resources. The abolition of the Revenue Deficit Grant (RDG), he said, has now delivered a second major shock to the hill state’s finances.
“Ending the Revenue Deficit Grant is a policy injustice and goes against the spirit of cooperative federalism,” Agnihotri said. He pointed out that Himachal’s total annual budget stands at around Rs. 58,000 crore, a large portion of which is consumed by salaries, pensions and other mandatory expenditures.
Over the last five years, the state received nearly Rs. 38,000 crore through RDG. Given inflation and changing economic conditions, the state had expected this support to increase to about Rs. 50,000 crore. The complete withdrawal of the grant, he warned, could stall ongoing development works and welfare schemes across Himachal Pradesh.
Agnihotri reminded the Centre that Himachal Pradesh was created with a clear understanding of its geographical limitations and dependence on central assistance. Since 1952, there has been a national consensus that the Centre would extend special financial support to the state due to its mountainous terrain and border status.
He said reliance on central assistance was not a weakness but a constitutional responsibility of the Union Government towards a hill state.
Targeting the BJP leadership, the Deputy Chief Minister accused BJP Members of Parliament from Himachal Pradesh, along with Leader of Opposition and former Chief Minister Jai Ram Thakur, of remaining silent on the issue. He said their failure to raise the matter amounted to compromising the financial future of the state.
Agnihotri demanded clarity on whether they stand with the Centre’s decision or with the interests of the people of Himachal Pradesh, stating that silence on a Rs. 10,000 crore annual loss would not be forgiven by the public.
