Himachal received higher Revenue Deficit Grant, clarifies Union Minister Shekhawat

Shimla, Feb 8 (IANS) Union Minister for Culture and Tourism Gajendra Singh Shekhawat on Sunday clarified that Himachal Pradesh has significantly received higher Revenue Deficit Grant (RDG) in recent years compared to earlier cycles, but with a clear indication that states “must strengthen their own revenue systems and adopt fiscal discipline”.  

He said fiscal deficit “is fundamentally the gap between revenue and expenditure and cannot be addressed through political-blame shifting but through structural financial reforms”.

The Union minister was responding to assertions of Chief Minister Sukhvinder Singh Sukhu that the report of the 16th Finance Commission would have a long-term impact on the state’s economy, including the upcoming Budget for 2026-27.

“Abolition of RDG is not the issue of a government, but it is a matter of the rights of the people of the state. We are ready to go to Delhi and meet the Prime Minister along with BJP MPs and MLAs to take up this issue. I think once the provision of RDG is gone, it will be difficult to reclaim the rights of the people,” the Chief Minister was quoted as saying.

However, the Union Minister clarified that RDG “is always conceived as a temporary and transitional support mechanism, first introduced on the recommendation of earlier Finance Commissions to help fiscally-stressed states manage short-term gaps”. “It was never meant to be a permanent entitlement,” Shekhawat told the media here.

He noted that successive Finance Commissions extended it with “cautionary notes and during the 15th Finance Commission period, especially amid COVID, the RDG support was front-loaded at unprecedented levels to help states recover.”

He pointed out that under the new Finance Commission formula, tax devolution to states has increased structurally, and Himachal Pradesh’s share has risen.

“With improved devolution and better fiscal management, states can offset RDG tapering without harming development expenditure.” He, however, cautioned that rising debt-to-GDP ratios, including Himachal crossing the 40 per cent mark, should be treated as a signal for corrective financial planning.

The Union Minister clarified that the Centre has consistently supported Himachal in tourism and infrastructure development. He highlighted that under the Special Assistance for Capital Infrastructure scheme, the state has been approved a long-term, 50-year interest-free loan for tourism infrastructure, effectively grant-like support.

He added that under schemes such as Swadesh Darshan, PRASAD, and challenge-based destination development, Himachal has received substantial funding and will continue to receive support against viable project proposals.

Addressing disaster-related concerns, he said the Union Government has significantly enhanced SDRF and NDRF allocations over the past decade and has also allowed states to spend funds on preventive and mitigation measures, not just post-disaster relief. He urged the state to increase investment in preventive resilience, given changing climate patterns.

--IANS

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