Yog Raj Sharma
The North News
Shimla, February 16
In an unusual move, Himachal Pradesh Governor Shiv Pratap Shukla on Monday concluded his address to the state Legislative Assembly within two minutes, skipping a portion of the speech over what he termed as “comments on a constitutional institution”.
Speaking at the start of the Budget Session of the Assembly, the governor said he would not read paragraph 3 to 16 of the prepared speech.
“I think there are comments on the constitutional institution from paragraph 3 to 16 and I do not think I should read it,” the governor told the House. He noted that the address from paragraph 17 onwards contains government achievements which would be subject to deliberation upon by the legislators.
Earlier, the governor informed the House that the session has been convened for passing supplementary demands for grants for the year 2025-26, the budget for the financial year 2026-27 and for important legislative business.
The skipped portion of the address focused on the revenue deficit grant (RDG). “The RDG has been proving extremely helpful in bridging the revenue deficit grant for smaller states, especially Himachal Pradesh. However, the 16th finance commission has recommended the abolition of the RDG which is against the spirit of Article 275 (1) of the Constitution,” the text read.
The prepared text, which was considered as read, stated, “the Finance Commission has presented combined revenue and expenditure estimates of various states for the award period instead of showing them separately, due to which the state specific financial requirements and revenue deficit related to Himachal Pradesh could not be clearly reflected”.
“India’s federal structure rests on fiscal balance and cooperative federalism, where smaller and hill states like Himachal Pradesh are protected through constitutional transfers such as the Revenue Deficit Grant. Himachal Pradesh, constrained by difficult terrain, limited revenue sources, and higher administrative costs, cannot sustain essential public services through its own resources alone,” the address stated.
If further argued that the denial of RDG weakens fiscal autonomy, deepens regional inequality, and undermines the spirit of federalism by forcing smaller states into financial distress and excessive dependence on discretionary support from the Government of India.
The address highlighted a “clear difference” between the recommendations of the 15th and 16th Finance Commissions as the 15th Finance Commission had recommended an RDG of about Rs 48,630 crore for 6 years (2020-21 to 2025-26), which has been “completely abolished” by the 16th Finance Commission.
According to the text, the grant for urban local bodies has been reduced from Rs 855 crore to Rs 435 crore. In contrast, there has been an increase in the share of central taxes, grants to rural local bodies and other special grants. Thus, in nominal terms, this deficit has been assessed at approximately Rs 33,195 crore, which in real terms is considered much higher.
The address described the discontinuation of the RDG as a matter of “serious concern” for small and hill states and in the case of Himachal Pradesh, this contribution was approximately 12.7 per cent, which is the second highest in the country after Nagaland and as a result, the state’s economy will “suffer heavy losses”.
It concluded that the discontinuation of the RDG will result in a shortage of essential financial resources required for development programs, social welfare schemes and disaster management.
With PTI inputs
