Himachal Pradesh to Convene Special Assembly Session Over Revenue Deficit Grant Discontinuation
The Himachal Pradesh government has taken a decisive step by announcing a special session of the Legislative Assembly to address the critical issue of the discontinuation of the Revenue Deficit Grant (RDG). This move comes as the state faces significant financial uncertainty following the cessation of this crucial central funding mechanism.
Cabinet Meeting to Finalize Session Details
Chief Minister Sukhvinder Singh Sukhu revealed that the state cabinet will meet on February 8 to determine the exact date for this special legislative gathering. The session will specifically focus on the RDG discontinuation, which has created substantial fiscal challenges for the hill state.
"We have called a Cabinet meeting on February 8 to fix the date for the special Assembly session, particularly on the issue of the discontinuation of RDG," stated CM Sukhu, emphasizing the urgency of the matter.
Cross-Party Consultation Planned
In a bid to foster bipartisan cooperation, the government has decided to convene a meeting of all legislators, including opposition BJP MLAs, following the cabinet meeting. The Chief Minister appealed for political unity, stating, "BJP leaders should not make it a political issue. It concerns the rights of Himachal Pradesh."
Sources indicate that the special session will be convened before the state's 2026-27 Budget Session, scheduled for the last week of February. The session requires formal approval from Governor Shiv Pratap Shukla, which is expected to be granted given the financial implications for the state.
Financial Impact and New Revenue Measures
The discontinuation of RDG represents a substantial financial blow to Himachal Pradesh. Between 2021 and 2026, the state received approximately Rs 40,000 crore through this grant mechanism. "I never imagined, even in my dreams, that the RDG would be completely stopped. We are going to face financially difficult times," expressed CM Sukhu, highlighting the severity of the situation.
To mitigate the financial impact, the government has announced a significant policy shift: the imposition of land revenue on all power projects operating within the state, including hydropower projects. This measure aims to generate alternative revenue streams to compensate for the lost central funding.
Historical Context of Revenue Deficit Grant
Under the recommendations of the 15th Finance Commission, Himachal Pradesh was sanctioned a total Revenue Deficit Grant of approximately Rs 37,199 crore for the period spanning 2021-22 to 2025-26. The year-wise allocation demonstrated a gradual reduction:
- Rs 10,249 crore in 2021-22
- Rs 9,377 crore in 2022-23
- Rs 8,058 crore in 2023-24
- Rs 6,258 crore in 2024-25
An additional Rs 3,257 crore is scheduled for release by March 31, 2026, after which the grant will be completely discontinued. The 16th Finance Commission, in its recent report tabled in Parliament, recommended ending the RDG, noting that the central government had advocated for its discontinuation in its memorandum to the Commission.
Political Reactions and State-Specific Concerns
Reacting to BJP leaders including MP Anurag Thakur, CM Sukhu emphasized Himachal Pradesh's unique circumstances. "BJP leaders should not include Himachal among 17 states for which the RDG was also discontinued. Himachal is far away in the view of infrastructure and it is not a consumption-based state," he argued, highlighting the state's geographical and developmental challenges that justify continued financial support.
The special Assembly session represents a critical juncture for Himachal Pradesh as it navigates the complex terrain of fiscal federalism while addressing its specific developmental needs in challenging mountainous terrain.
