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Himachal CM Sukhu to meet PM Modi over discontinuation of Revenue Deficit Grant, says approaching court is the last option

Himachal Pradesh Finance Secretary Devesh Kumar, who briefed the Cabinet, described the situation as financially alarming.

SukhuHimachal Pradesh CM Sukhu said the state had presented its ecological and disaster vulnerabilities before the Finance Commission. (File Photo)

Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu Sunday said the proposed withdrawal of Revenue Deficit Grant (RDG) by the Centre would have around 30 per cent adverse impact on the state budget.

Addressing the media after holding a special Cabinet meeting to assess the fiscal implications of RDG withdrawal, he said, “The option to move the court against the 16th Finance Commission’s decision to discontinue the RDG is the last step. Before taking it, we will meet Prime Minister Narendra Modi, urging him to restore the RDG. He has the authority to restore this.”

Sukhu warned that the decision to discontinue the RDG could severely destabilise the state’s finances and impact its annual budget to a significant extent.

Revenue Deficit Grant (RDG) is a post-devolution grant recommended by the Finance Commission to states whose revenue receipts fall short of their revenue expenditure even after receiving their share of central taxes.

Himachal Pradesh, being a special category hill state with difficult terrain, limited industrial base and high infrastructure costs, has historically depended heavily on RDG to bridge its fiscal deficit. The grant has helped the state fund committed liabilities such as salaries, pensions, social sector schemes and maintenance of public infrastructure.

With the 16th Finance Commission revisiting fiscal transfers and reportedly discontinuing RDG support for Himachal Pradesh, the state government fears a massive resource gap.

Sukhu said the state had presented its ecological and disaster vulnerabilities before the Finance Commission.

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The chief minister also highlighted that landslides were included under the National Disaster Response Fund (NDRF) coverage following persistent requests by the state government, given Himachal’s high vulnerability to slope failures and extreme weather events.

Defending the government’s fiscal management, Sukhu said the state had generated Rs 3,000 crore to Rs 4,000 crore from its own resources over the last three years, but added that internal revenue alone could not compensate for the loss of RDG.

Finance secretary warns of ‘catastrophic’ situation

Himachal Pradesh Finance Secretary Devesh Kumar, who briefed the Cabinet, described the situation as financially alarming.

“We are heading towards a major catastrophe. Our hands were tied. We need untied money, and that could only be possible through RDG,” he said.

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He projected a resource gap of around Rs 6,000 crore for FY 2026-27, even after excluding development works, pending liabilities and state schemes.

Kumar claimed that even aggressive fiscal reforms, revenue augmentation and expenditure compression would not fully bridge the deficit, adding that RDG had historically acted as a financial lifeline for the hill state.

Saurabh Parashar is an Assistant Editor at The Indian Express, primarily responsible for the publication’s coverage of Himachal Pradesh. He is a seasoned journalist with over 17 years of experience in print media, specializing in crime, legal affairs, and investigative reporting. Professional Background Education: He holds a Master’s degree in Mass Communication from Guru Jambheshwar University of Science & Technology (Hisar) and a Law degree from Himachal Pradesh University (HPU), Shimla. This legal background significantly informs his reporting on complex judicial and administrative matters. Career Path: Before joining The Indian Express in 2017, he spent 12 years with The Times of India. Core Beats: His primary focus is the socio-political landscape of the hill state, with a specific emphasis on the environment, forest conservation, drug menace (specifically "Chitta"), affairs related to tribal and archaeology and the unique challenges of governance in high-altitude regions. Recent Notable Articles (Late 2025) His recent reporting highlights the critical intersection of policy, law, and social safety in Himachal Pradesh: 1. "Himachal’s battle against Chitta: Why the border areas are most vulnerable" (Late 2025): An investigative look at the transit routes from Punjab and the impact on local youth. 2. "Shimla ropeway clears key hurdle as 820 trees face the axe :According to the Forest Survey of India’s 2021 assessment, 47.21 percent of Shimla’s 5,131 sq km geographical area is under forest cover (Nov 17, 2025). 3. "Himachal to handover 2.7427 ha of non-forest land for Shimla Ropeway: Given the land’s non-forest nature, RTDC and the state will not require permission from MoEFCC" (Nov 18, 2025) 4. "How the centuries-old Jodidara tradition is fading in Himachal’s Trans-Giri region: Jodidara: a form of fraternal polyandry—has long been part of Hatti tribal culture in the Trans-Giri region of Himachal Pradesh and adjoining Uttarakhand. It is believed to have evolved to prevent division of ancestral land and maintain unity among brothers in the harsh, mountainous terrain" (Aug 18, 2025) Legal & Agricultural Affairs "Kisan Sabha hails SC’s setting aside Himachal HC order to remove orchards from forest land" (Dec 18, 2025): Covering a major Supreme Court victory for farmers, where a High Court order to remove fruit-bearing apple orchards was overturned. "Himachal Cabinet nod to new tourism policy; focus on home-stays in tribal areas" (Dec 11, 2025): Detailing the legislative push to decentralize tourism and bring economic benefits to Lahaul-Spiti and Kinnaur. 3. Governance & Environment "Forest rights and development: Why Himachal is seeking more leeway from Centre" (Dec 19, 2025): Reporting on the legal hurdles faced by the state in infrastructure projects due to the Forest Conservation Act. "Cloudbursts and resilience: How Himachal’s remote villages are building back better" (Nov 2025): Following up on the long-term rehabilitation efforts after monsoon-related disasters. Crime especially cyber crimes, crypto currency etc: crypto currency: "Agents in uniform, motivational speeches, lavish parties: How a Himachal crypto con went unnoticed:A serial conman, a ‘Nelson Mandela Nobel Peace Award winner', and retired policemen got together to pull off a Rs 1,740-crore fraud" (Nov 10, 2023) Signature Beats Saurabh is recognized for his tenacious reporting on the state's drug epidemic. His deep familiarity with the topography and tribal culture of Himachal allows him to report from remote locations like Spiti, Pangi, Shillai, which are often overlooked by national media. His legal expertise makes him a primary choice for covering the Himachal Pradesh High Court on issues ranging from local body elections to environmental PILs. X (Twitter): @saurabh_prashar . ... Read More

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