The 15th Finance Commission has recommended a total of Rs 81,977 crore for Himachal Pradesh over the next five years, which includes the state’s share in central taxes and duties worth Rs 35,064 crore and total grants-in-aid worth Rs 46,913 crore.
The grants-in-aid include, among other things, a post devolution revenue deficit grant of Rs 37,199, a grant of Rs 3,049 crore for local governments, and Rs 2,258 crore for disaster management.
They also include Rs 2,222 under the Pradhan Mantri Gram Sadak Yojana (PMGSY), with the Commission report saying that Himachal still needs to connect with roads 7,628 census villages located in difficult terrain.
“HP has lower road density than the national average. Since the scope for railways and inland water transport is negligible in a hill state, roads are its only lifeline. Inadequate road network leads to heavy head-load cost of providing public services,” the Commission said.
It said that Himachal may enhance its gross state domestic product (GSDP) by boosting tourism with measures such as improving the air and road connectivity, developing new offbeat hill-stations, starting heli-taxi services to remote hill-stations, encouraging eco-tourism and adventure sports and promoting homestays as a viable alternate source of income for the people.
Suggesting reforms, the Commission said that the state has a high debt to GSDP ratio which needs to be consolidated in line with the new Fiscal Responsibility and Budget Management (FRBM) Act and other recommendations made by the Commission. “The state has not done well in terms of GST collections. It needs to find innovative ways to increase both its own tax revenue (OTR) and own non-tax revenue (ONTR),” said the report. It added that the state also “needs to take measures to restructure and rationalise its spends by reducing the burden of committed expenditure”.
The report further said that indicators related to education, health, water and sanitation are better for Himachal than national averages, and the state was the second in the country to be declared open-defecation free. Eight percent of the state’s population lives below the poverty line, and its annual per capita revenue expenditure on health and education is much higher than the National Health Education Standards (NEHS) averages, it said.
What the 15th Finance Commission says
# Himachal’s share in central taxes and duties – Rs 35,064 cr
# Grants-in-aid for Himachal – Rs 46,913 cr
# Total grants recommended for Himachal – Rs 81,977 cr