Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu presses Union Finance Minister Nirmala Sitharaman for Rs 8,000 crore to bridge a looming fiscal gap

In a candid meeting in New Delhi, Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu sat down with Union Finance and Corporate Affairs Minister Nirmala Sitharaman to discuss a fiscal crunch that has been tightening around the hill state.

According to the Chief Minister, the withdrawal of the Revenue Deficit Grant (RDG) from the 2026‑27 budget – a move that follows the 16th Finance Commission’s recommendations – has left Himachal with an annual shortfall of roughly Rs 8,000 crore. Over the past few years, the gradual scaling down of the RDG has only deepened the pressure on the state’s coffers.

‘We are a hill state,’ Sukhu reminded the Union Minister, noting that the rugged terrain, frequent natural calamities and the higher cost of building and maintaining infrastructure make public‑service delivery inherently expensive. He underscored that, despite these constraints, the state government has been trying to tighten its belt through financial reforms and new revenue‑generation measures.

Among the specific asks, the CM pressed for an exemption from supply and vendor payments under the Special Assistance to States for Capital Investment (SASCI) scheme, as part of the SNA‑SPARSH model. He also requested a boost to the allocation for Externally Aided Projects (EAPs), suggesting that the current assistance be effectively doubled to reflect Himachal’s unique challenges.

Another key demand was an increase in the borrowing ceiling – from the present 3 % to 4 % of the Gross State Domestic Product (GSDP). Sukhu argued that a modest expansion of fiscal space would help the state meet its existing liabilities while still financing essential services and development projects.

On the state’s side, Sukhu highlighted several proactive steps. Himachal has become the first Indian state to guarantee a Minimum Support Price (MSP) for crops grown through natural farming, a move meant to uplift farmer incomes and stimulate the rural economy.

Finance Minister Sitharaman responded with reassurance, stating that the concerns raised would be examined sympathetically. She pledged that the Union would consider additional assistance under Special Central Assistance, aiming to shore up Himachal’s finances and support its development agenda.

The dialogue, though still in its early stages, reflects the broader struggle of hill states to balance limited resources with the high cost of delivering public goods. As the negotiations continue, Himachal Pradesh hopes that a timely infusion of central funds will help close the looming Rs 8,000 crore gap.