RDG Abolition Could Hit Himachal Pradesh’s Economy
Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu on Sunday (February 8, 2026) expressed serious concern over the 16th Finance Commission’s recommendation to abolish Revenue Deficit Grants (RDG). He warned that removing these grants could severely impact the hill state’s economy in the long term.
He described the issue as a matter of the people’s rights, emphasizing that it is not limited to government interests alone.
Bipartisan Appeal to Protect State Rights
The Chief Minister urged MPs and MLAs of the Bharatiya Janata Party (BJP) to join him in a delegation to meet Prime Minister Narendra Modi and discuss the potential consequences of scrapping RDG.
“Abolition of RDG is not a government issue; it concerns the rights of the people of Himachal Pradesh. We are ready to go to New Delhi along with BJP leaders to address this matter. Once RDG is removed, it will be very difficult to reclaim the people’s rights,” Sukhu stated after a Finance Department presentation on the state’s financial position.
He added that the BJP MLAs were invited to attend the presentation but did not participate. RDG has been scrapped for 17 states, but Himachal Pradesh is among the worst affected, with 12.7% of the state budget coming from RDG, the second highest in India.
Post-GST Revenue Challenges
The Chief Minister highlighted that tax collection growth has slowed to around 8% in the post-GST era, down from 13–14% before GST. He stressed that collective efforts are necessary to safeguard the interests of the people.
He further noted that the state government aims to make Himachal Pradesh self-reliant, having earned ₹26,683 crore from its own resources since assuming office. However, with limited natural resources—primarily river waters, forests, and tourism—this revenue generation is not enough to replace RDG.
Constitutional Significance of RDG
During the presentation, officials highlighted that RDG was a constitutional provision under Article 275(1) and has been received by the state since the 15th Finance Commission. Himachal Pradesh was formed based on public aspirations, not as a financially self-sufficient unit, making the grants crucial for ongoing governance.
The abolition of RDG is expected to affect not only the current government but also future administrations, creating a significant financial challenge for the state and impacting the welfare of its residents.
