CM Terms Union Budget a “Labyrinth of Neglect,” Accuses Centre of Unfair Fiscal Treatment
Shimla: Chief Minister Thakur Sukhvinder Singh Sukhu has strongly criticised the Union Budget 2026–27, calling it a “labyrinth of neglect” that is anti-poor, anti-farmer and dismissive of the legitimate concerns of smaller and hill states. He said the budget reflects an inequitable approach and fails to address the developmental priorities of Himachal Pradesh.
Expressing deep disappointment, the Chief Minister accused the Union Finance Minister, Nirmala Sitharaman, of overlooking the state’s specific fiscal and structural challenges. He also raised serious objections to the recently tabled Sixteenth Finance Commission (FC-XVI) Report for 2026–31, particularly its failure to recommend meaningful Revenue Deficit Grants (RDGs).
Despite repeated representations, detailed memoranda and technical submissions by the state, the Finance Commission has not recommended RDGs for Himachal Pradesh and other small states—a decision the Chief Minister described as unjust and deeply hurtful to public sentiment.
He pointed out that Article 275(1) of the Constitution mandates state-specific grants from the Union Government to bridge revenue deficits. Such grants were consistently provided from 1952 up to the Fifteenth Finance Commission. “For the first time, the Sixteenth Finance Commission has abruptly discontinued Revenue Deficit Grants,” he said.
Under the Fifteenth Finance Commission, Himachal Pradesh received approximately ₹37,000 crore in RDGs. Even during the interim period following the Fourteenth Finance Commission, assistance of ₹11,431 crore was provided on the basis of an interim report during the tenure of the previous BJP government, he recalled.
The Chief Minister said the omission fails to recognise the state’s structural fiscal disadvantages, including nearly 67 percent forest and ecological cover, higher per-capita costs of service delivery in mountainous terrain, and repeated natural disasters that have caused losses exceeding ₹15,000 crore in recent years.
Himachal Pradesh had expected targeted central support for hill-specific priorities such as hydropower development, eco-tourism, improved road and rail connectivity, and compensation for revenue losses due to GST implementation. He warned that the absence of RDGs would severely constrain the state’s ability to deliver essential public services, maintain fiscal stability and invest in future growth, potentially increasing dependence on borrowing.
Criticising the broader budgetary framework, the Chief Minister said the Union Budget has once again failed to address pressing national challenges such as unemployment, poverty and rising prices. He expressed disappointment that apple growers, who contribute nearly ₹5,000 crore annually to Himachal Pradesh’s economy and support thousands of families, have found no mention or relief in the budget.
“The budget offers no concrete measures to address chronic issues in agriculture, including inadequate support prices, lack of investment in modern farming practices, infrastructure and technology. It appears to favour the wealthy at the cost of ordinary citizens,” he said.
Sh. Sukhu further highlighted that the budget has ignored the long-pending demand for railway expansion in Himachal Pradesh, with no allocations for critical projects such as the Bhanupali–Bilaspur and Baddi–Chandigarh railway lines. He also noted that the state’s demand to increase the borrowing limit from 3 percent to 4 percent of GSDP has been disregarded.
Despite Himachal Pradesh being home to globally renowned tourist destinations, the budget makes no specific provision for tourism infrastructure development in the state. While a Buddhist Circuit has been announced for northeastern states, the Chief Minister said it would have been appropriate to include Himachal Pradesh’s Buddhist Circuit as well. Although the budget mentions mountain trails, their actual benefit to the state remains uncertain pending detailed guidelines.
He said that while the Union Budget emphasises capital investment, hill states require special provisions for disaster-resilient infrastructure, climate adaptation, road connectivity, tourism and hydropower development. Greater flexibility in centrally sponsored schemes, higher weightage to ecological and forest indicators in fiscal devolution, and the creation of a separate Disaster Risk Index for Himalayan states would have strengthened cooperative federalism.
The Chief Minister also criticised the decision to retain interest-free loans to states at ₹1.5 lakh crore without enhancement, adding that stringent conditions attached to these loans disadvantage smaller states due to higher project costs. He further pointed out that the discontinuation of GST compensation has resulted in significant annual revenue losses for Himachal Pradesh.
“As a special category hill state, Himachal Pradesh faces unique challenges arising from difficult terrain, fragile ecology, frequent natural disasters and a limited own-revenue base. In this context, sustained fiscal support—especially a clear framework for continued RDGs beyond the current Finance Commission period—is essential,” he said.
Reaffirming the state government’s commitment to fiscal prudence, improved revenue mobilisation and efficient public service delivery, the Chief Minister urged the Union Government to engage in constructive dialogue with states. He emphasised that true federalism requires inclusive, region-balanced growth that fully integrates the aspirations and constraints of hill states into India’s development roadmap.