Sharing the cost of conservation

The Himachal Pradesh government is ready with its wish list to greet the Finance Commission team when it comes visiting this week.

The Himachal Pradesh government is ready with its wish list to greet the Finance Commission team when it comes visiting this week. The memorandum it has prepared for the Commission asks for a special financial package and benefits like special debt relief.

Apart from asking the Commission for certain concessions, the state is also looking at different ways of generating revenue. One of the proposals it is working on is ‘Payment for Environmental Services’ (PES). The idea is to charge neighbouring states for environmental benefits that are possible because of Himachal’s efforts.

“We want neighbouring states to have a stake in our forests, biological diversity and tree cover—benefits of which also flow to the downhill states. Himachal can be suitably compensated for protection and conservation of the environment, a concept already popular in countries like Costa Rica,” says Himachal Chief Minister Prem Kumar Dhumal. He is also trying to get states like Uttarakhand, Jammu and Kashmir and Madhya Pradesh to come together and approach the Centre with this proposal.

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According to estimates drawn by Himachal, if this service payment was levied, Himachal could earn Rs 10,523 crore by 2015. The state claims it loses Rs 1,000 crore every year because of its ban on felling and other critical conservation projects.

The 13th Finance Commission will also deliberate on the issue of carbon credits as the Centre is still to put in place a legally binding carbon credit mechanism. This alone could generate an income of Rs 500 crore per annum for the state.

Other issues that Himachal will be taking up with the Commission is the Centre’s permission to levy generation tax on the hydro-electric power it produces and a grant of the state’s legitimate share in the Bhakra-Beas Management Board (BBMB) projects.

A resource starved-state, Himachal appears to be heading for a higher debt trap—its debt burden already touching Rs 24,000 crore-in 1997 it was just Rs 5,000.

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Power is another subject Dhumal will be taking up with the Commission. As of now, all power projects in Himchal have to give 12 per cent free power to the state government—the state earns by selling this further to its neighbours. But this is applicable only on projects commissioned after September 1990. Himachal now wants this royalty to be collected even from hydel projects set up before 1990. If this comes through, the state stands to earn Rs 1,500 crore in arrears.

Dhumal will also be asking for special funds for two proposed ultra-mega schemes for Shimla and its neighbouring town Solan—the state’s biggest economic growth centres.

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