Shimla, March 3 -- Himachal Pradesh chief minister Sukhvinder Singh Sukhu met Union finance minister Nirmala Sitharaman in New Delhi on Monday to submit a critical representation warning of an imminent fiscal collapse in the hill state. The meeting follows the 16th Finance Commission's decision to scrap the Revenue Deficit Grant (RDG) for the 2026-31 period, a move set to strip Himachal Pradesh of nearly 25% of its total revenue receipts. To counter the massive resource gap created by the loss of federal grants, Sukhu proposed a first-of-its-kind annual 'green bonus' of Rs.50,000 crore. Seeking a financial package to cover the revenue deficit for financial year 2026-27, which may be released as an untied grant under special central assistance terming Himachal Pradesh as a natural carbon sink, Sukhu said, "Assessing all states on a single yardstick was neither healthy nor transparent." Sukhu urged the Union finance minister to constitute a committee to properly assess the economies of hill states and recommend corrective measures The CM apprised the finance minister that discontinuation of RDG will have a far reaching adverse impact on the financial health of the state. He said that Himachal Pradesh cannot be compared to other states whose RDG has been discontinued. He said that RDG contribution for the state was about 12.7%, which was second highest after Nagaland. He said that big states can withstand the discontinuation but the economy of Himachal Pradesh cannot. The CM argued that the state must be compensated for preserving 67% forest cover, an ecological service that comes at the direct cost of industrial expansion and revenue-generating projects. Additionally, the state is seeking a 2% increase in its borrowing limit of the GSDP to sustain basic governance and meet committed liabilities. Sukhu termed the discontinuation as "undermining the spirit of cooperative federalism". He said that the Article 275(1) of the Constitution provides for such grants to the state which cannot bridge the gap between their revenue receipts and expenditure. He said, "This was for the first time that the Finance Commission has totally ignored the developmental needs of small hill states". He also informed the finance minister that since the last two-three years, several measures were taken to reduce expenditure, no off-budget borrowing was resorted and about Rs.600 crore annually was raised through various cesses. Sukhu said that more than 1500 institutions were rationalised and denotified, and rationalisation of department and government posts is ongoing. The CM pointed out that despite the constraints, continuous efforts are being made to enhance revenue, especially in energy, tourism and agriculture. The CM apprised the Union finance minister that arrears of DA and pay revision could not be paid to government employees and pensioners which is about 15% behind the counterparts in the central government. The state's financial health is under severe strain due to high debt and the geographic constraints of a mountain economy. Depriving the state of the RDG, traditionally used to bridge the gap between essential expenditure and limited internal revenue, threatens a total breakdown of the state's fiscal framework. Sitharaman assured of sympathetic consideration for the demands of the state. Following the discussion, Himachal officials described the meeting as positive, noting that the Union finance minister was "considerate to the state's financial concerns" and the unique challenges posed by its environmental commitments....