HP CM rues loss of ₹15,000 crore annual RDG from Centre, targets BJP silence

Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu on Saturday stepped up pressure on the Centre and the state unit of the Bharatiya Janata Party over the withdrawal of the Revenue Deficit Grant (RDG) , arguing that the decision amounts to a major fiscal shock for the hill state and accusing the BJP of keeping quiet despite the stakes involved.

RDG is a Finance Commission–recommended grant , awarded for a five-year award period , to states whose revenue expenditure exceeds their revenue receipts even after tax devolution . Unlike project-linked or conditional grants, RDG is meant to fund core, unavoidable spending such as salaries, pensions, healthcare and education.

For Himachal Pradesh, the numbers are significant. During the 15th Finance Commission period, the state received around ₹15,000 crore annually as RDG , translating to roughly ₹75,000 crore over five years . With Himachal’s annual budget hovering around ₹60,000–65,000 crore , RDG accounted for nearly 15% of total expenditure . “A 15% revenue-side loss is not marginal. It directly affects the government’s ability to run basic services,” Sukhu has argued, saying the grant was effectively load-bearing , not a fiscal cushion.

The contrast with larger states is stark. Andhra Pradesh , for instance, received roughly ₹8,000–12,000 crore a year as RDG, but against a budget of over ₹2.5 lakh crore , the grant formed only 3–5% of total spending. In Tamil Nadu , RDG averaged ₹4,000–6,000 crore annually , just 1–2% of a budget exceeding ₹3.5 lakh crore . While its withdrawal tightens finances, it does not fundamentally alter day-to-day governance in these states.

The Finance Commission , in discontinuing RDG under the current award cycle, argued that revenue deficits should be addressed through higher and more predictable tax devolution , conditional and performance-linked grants , improved own-tax effort , and tighter expenditure discipline , rather than permanent gap-filling support. The Commission also assumed states could use limited borrowing to manage the transition.

Himachal’s government counters that this framework overlooks structural constraints . Conditional grants cannot be used for salaries or pensions, and replacing a grant with borrowing only raises future interest costs , locking the state into a cycle of debt. Sukhu has challenged state BJP leaders to press the Centre for restoration or an alternative arrangement, saying Himachal is asking for fiscal equity, not largesse , as the debate over Centre–state finances sharpens.