SHIMLA, Feb. 3 -- The 16th Finance Commission's decision to discontinue the revenue deficit grant 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, and mandatory expenditures. Over the last five years, the state received Rs.38,000 crore via the revenue deficit grant (RDG). Given current inflation and economic shifts, the state expected this to rise to Rs.50,000 crore. However, the discontinuation is expected to cost the state nearly Rs.40,000 to Rs.50,000 crore over the next five years. Already burdened by a debt exceeding Rs.1 lakh crore, the state is struggling to meet basic liabilities. Sukhu termed the move a "betrayal," warning that the lack of central support threatens the state's path toward self-reliance. He said that the Centre ignored the state's plea for a special disaster package following Rs.15,000-crore losses due to the recent natural disasters. "Ending the revenue deficit grant amounts to a violation of the constitutional rights of states under India's federal structure. Small and mountainous states like Himachal Pradesh can never become revenue surplus," Sukhu said. "This is a globally accepted convention for mountain regions," the chief minister said, adding that if the RDG is stopped, the state must be given the right to impose taxes on its own resources. Deputy chief minister Mukesh Agnihotri said that the commission's recommendations would inflict a direct annual financial blow of more than Rs.10,000 crore. He labeled the stoppage of grant a "double blow" following the earlier end of GST compensation. "Ending RDG is a policy injustice and the complete removal of this grant threatens to stall ongoing developmental projects and welfare schemes," he said. Agnihotri told the Centre that Himachal Pradesh's unique topography prevents it from being entirely self-reliant. "Since 1952, it has been a national consensus that the Centre would provide special financial assistance to the state. The Centre must fulfil its constitutional obligation toward a border and mountain state," he added. Defending the commission's decision, BJP MP Anurag Singh Thakur claimed that Himachal's share from the divisible pool has actually increased. "RDGs were a temporary, transitionary instrument," he said, adding that the commission moved away from routine grants because of a persistent pattern of weak tax efforts and high committed expenditure in states like Himachal. Thakur pointed to specific fiscal yardsticks where Himachal has lagged behind neighboring states such as Uttarakhand. He said Himachal's capital expenditure (Capex) as a percentage of total spending remains low, indicating that the budget is being consumed by debt servicing and revenue items rather than productive investments. "The path to lasting prosperity for Himachal lies in restoring fiscal discipline, improving our tax effort, and investing in the future rather than debating who is taking from whom," he added. However, state industry minister Harshwardhan Chauhan said that any increase in the state's share would be marginal. "The increase will only be between Rs.1,500 crore and Rs.2,000 crore annually, whereas we are looking at a loss of nearly Rs.8,000 crore from the loss of the RDG," Chauhan said. While the political debate rages, economic experts urged the state government to focus on strict fiscal discipline. Devinder Kumar Sharma, former principal adviser and secretary planning, Himachal government, said the state's primary challenge isn't the debt itself, but how that money is being spent. "Fiscal prudence is what is needed most," Sharma said. "Borrowing is a standard tool for funding capital expenditure and building assets. The crisis begins when loans intended for development are diverted to cover whopping revenue expenditures, such as salaries and administrative costs." Chairman of economics department, Himachal Pradesh University, Dr Sanjeev Kumar, said: "While total financial independence from the Centre may be impossible in a federal structure, the state must aggressively reduce its dependence." "The state must look at its own backyard to generate revenue. Tourism is a lifeline for hill states such as Himachal and Uttarakhand, and we must boost this sector while simultaneously fighting for our rightful dues from power firms," he added....