Anurag Thakur Clarifies Himachal's Increased Share Under 16th Finance Commission
In a detailed clarification issued from Shimla on Monday, former Union minister and BJP MP from Hamirpur, Anurag Singh Thakur, addressed recent claims regarding Himachal Pradesh's financial allocations under the 16th Finance Commission. Thakur provided a comprehensive breakdown of the state's fiscal position, emphasizing the objective and data-driven nature of the commission's recommendations.
Enhanced Share in Divisible Pool
Thakur highlighted a significant increase in Himachal Pradesh's share of the divisible pool under the 16th Finance Commission. The state's share has risen from 0.83% under the 15th Finance Commission to 0.914% under the 16th Finance Commission. This enhancement translates into an additional Rs 2,388 crore for the state in the fiscal year 2025-26, providing a substantial boost to its financial resources for development and growth initiatives.
Clarification on Revenue Deficit Grants
The BJP MP released this detailed response to counter claims made by Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu regarding the discontinuation of revenue deficit grants (RDGs) under the 16th Finance Commission. Thakur explained that the RDGs under the 15th Finance Commission were designed as temporary, front-loaded grants specifically aimed at helping states navigate the economic shock caused by the Covid-19 pandemic. These grants were intended to assist states in achieving near-zero revenue deficits by the 2025-26 fiscal year, serving as a transitional support mechanism during a period of global crisis.
Thakur further clarified that the 16th Finance Commission discontinued routine RDGs because persistent issues in some states, including Himachal Pradesh, hindered structural fiscal improvement. He pointed out that weak tax effort and high committed expenditures in these states necessitated a more conditional approach to ensure long-term fiscal sustainability and discipline.
Himachal's Fiscal Challenges
Elaborating on Himachal Pradesh's specific fiscal challenges, Thakur outlined several key metrics that justified the 16th Finance Commission's conditional approach:
- Low own-tax effort: The state's own-tax effort stood at only 5.6% of the gross state domestic product (GSDP) in 2023-24, indicating a need for improved tax mobilisation.
- High revenue expenditure: Revenue expenditure accounted for 21% of the GSDP, reflecting significant ongoing financial commitments.
- Large deficits and rising debt: The state faced substantial deficits, with debt levels rising to 42.8% of the GSDP in 2023-24, posing concerns for fiscal stability.
- Low capital spending: Limited investment in capital projects highlighted the need for strategic fiscal management to foster long-term growth.
These factors collectively underscored the necessity for a more targeted and conditional fiscal framework, as adopted by the 16th Finance Commission, to encourage structural reforms and financial prudence.
Objective Criteria and Non-Partisan Allocations
Thakur emphasized that the allocations under the 16th Finance Commission were based on objective criteria and not influenced by partisanship. He noted that other states, including those ruled by opposition parties, also benefited from the commission's formula. This demonstrates that the financial recommendations were grounded in empirical data and aimed at promoting equitable development across all states, regardless of political affiliations.
Path Forward for Himachal Pradesh
In his concluding remarks, Thakur suggested that the state machinery should focus on strengthening fiscal discipline, improving tax mobilisation, and investing strategically in the state's future. He emphasized that the increased devolution under the 16th Finance Commission presents a strong opportunity for Himachal Pradesh to accelerate its growth trajectory. By leveraging these enhanced resources effectively, the state can address its fiscal challenges and pave the way for sustainable economic development.
Thakur's clarification aims to provide a transparent and factual perspective on the financial dynamics at play, encouraging informed public discourse and constructive policy actions for Himachal Pradesh's prosperity.
