SHIMLA, Feb. 3 -- The 16th Finance Commission's decision to discontinue the revenue deficit grant (RDG) is set to hit the cash-strapped Himachal Pradesh hard, plunging the state into a deeper financial crisis.

The setback comes at a time when chief minister Sukhvinder Singh Sukhu met Union finance minister Nirmala Sitharaman thrice in the last four months, seeking a special package from the Centre to fight the fiscal crisis and requesting an increase in the state's borrowing limit. Additionally, the chief minister also sought an additional Rs.50,000 crore as a Green Fund for hill states.

With a total state budget of approximately Rs.58,000 crore, Himachal finds a significant portion of its funds already committed to salaries, pensions, ...