Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu on Monday met Union Finance Minister Nirmala Sitharaman to seek a special financial package aimed at addressing the state’s projected revenue deficit for 2026–27. The Chief Minister urged the Centre to extend special assistance following the discontinuation of the Revenue Deficit Grant (RDG), warning of significant fiscal stress for the hill state.

During the meeting, Sukhu conveyed that the withdrawal of the RDG would have far-reaching adverse implications for Himachal Pradesh’s financial stability. He pointed out that the RDG contribution accounted for approximately 12.7 per cent of the state’s revenue receipts — the second-highest dependence among states after Nagaland. Unlike larger states with more diversified economies, Himachal Pradesh, he argued, lacks the financial resilience to absorb the loss of such grants.

The Chief Minister said that assessing all states on a uniform yardstick was neither equitable nor consistent with the principles of cooperative federalism. Citing Article 275, which provides for grants-in-aid to states in need of financial assistance, Sukhu maintained that small and hilly states face unique developmental challenges and revenue constraints that require differentiated treatment. He described the discontinuation of RDG as a move that undermines the spirit of fiscal balance between the Centre and the states.

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Highlighting steps taken by his government to improve fiscal discipline, Sukhu informed the Finance Minister that the state had avoided off-budget borrowings and undertaken expenditure rationalisation over the past two to three years. He added that nearly Rs 600 crore is being mobilised annually through various cesses. However, he noted that revenue losses following the implementation of the Goods and Services Tax (GST), coupled with limited avenues for tax expansion, have made it difficult to bridge the widening fiscal gap.

In response, Sitharaman assured the Chief Minister that the Centre would give sympathetic consideration to the state’s demands. Sukhu also requested the constitution of a dedicated committee to examine the economic conditions of hill states and recommend corrective measures, emphasising the need for tailored fiscal solutions to ensure sustainable development in geographically challenging regions like Himachal Pradesh.

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