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Himachal CM Sukhu Flags GST Losses, Fiscal Stress After Delhi Meetings

Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu has highlighted the state's acute fiscal challenges following meetings with Union ministers in Delhi. He emphasized that the GST regime disproportionately harms production-based hill states like Himachal, diverting benefits to high-consumption states. The CM also cited reduced revenue deficit grants and the high cost of disaster infrastructure repair in mountainous terrain as key financial pressures. Sukhu added that issues like apple imports and hydropower royalties were discussed, and a cabinet reshuffle is imminent.

Key Points: Himachal CM Sukhu on State's Fiscal Stress, GST Revenue Losses

  • Fiscal stress from reduced grants
  • GST causes long-term revenue loss
  • Higher disaster restoration costs in hills
  • Old Pension Scheme restored despite constraints
  • State pursuing pending issues with Centre
2 min read

After Delhi meetings, CM Sukhu flags fiscal stress, GST losses and revenue challenges for Himachal

Himachal CM Sukhvinder Singh Sukhu highlights state's fiscal challenges, GST losses, and need for special financial support for hill states after Delhi meetings.

"Himachal will never get the real benefit of GST under the present system. - CM Sukhvinder Singh Sukhu"

Shimla, January 18

A day after returning from New Delhi following a series of meetings with Union ministers, Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu on Saturday highlighted the state's growing fiscal challenges, sharp revenue losses due to GST and the need for special financial support for hill states.

Speaking to the media in Shimla, Sukhu said he had raised these concerns before the 16th Finance Commission and senior Union ministers, stressing that Himachal Pradesh could not be assessed on the same financial parameters as larger, consumption-driven states.

The Chief Minister said revenue deficit grants (RDG) to the state had been consistently reduced over the years, adding pressure on the state exchequer. He pointed out that while the 15th Finance Commission had approved substantial RDG, the allocation had gradually declined, forcing the state to adopt strict fiscal discipline.

Referring to the Goods and Services Tax regime, Sukhu said GST had caused long-term revenue losses to Himachal Pradesh and other hill states.

"GST is consumer-based. We are a production state, but the benefit goes to states with higher consumption and population. Himachal will never get the real benefit of GST under the present system," he said.

He added that prior to GST, industrial hubs such as Baddi generated significant revenue through VAT and excise duties, which was later partially compensated only for a limited period. The reduction in GST rates, particularly for the cement industry, had further reduced the state's earnings, he said.

Sukhu also raised concerns over disaster-related expenditure, stating that the cost of restoring infrastructure in hilly terrain is far higher than in the plains and should be factored into national disaster assessment parameters.

On pension reforms, the Chief Minister reiterated that the Old Pension Scheme was restored with a long-term perspective and not for political considerations, adding that the state had taken the decision despite fiscal constraints.

He said he had also discussed issues related to apple imports with Union Commerce Minister Piyush Goyal and hydropower royalty payments with the Union Power Minister, asserting that the state government would continue to pursue all pending matters in the interest of Himachal Pradesh. Sukhu also said that the state cabinet reshuffle is also on cards soon and new schemes would be launched soon.

- ANI

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Reader Comments

P
Priyanka N
As someone from a hill state, I completely understand the disaster cost point. Rebuilding a road after a landslide here costs 5 times what it does in Punjab or Haryana. The national parameters must be revised. Hope the Finance Commission listens. 🙏
A
Aman W
While I sympathize with the fiscal stress, restoring the Old Pension Scheme was a financially reckless move. It's a populist decision that will burden future generations. The state should focus on generating new revenue, not locking itself into unsustainable commitments. Just my two paise.
S
Sarah B
Interesting to see a state CM break down the financial mechanics like this. The point about cement GST rates affecting revenue is specific and telling. The 'one size fits all' approach rarely works in a diverse country like India. Hope for a constructive solution.
V
Vikram M
Good that he raised the apple import and hydropower royalty issues in Delhi. These are vital for Himachal's economy. Tourists love our apples, but cheap imports hurt our farmers. The state must get its fair share from the power generated here. Jai Himachal! 🍎⛰️
K
Karthik V
This is a common story for many special category states. The Finance Commission formulas need an overhaul. We can't expect states with difficult terrain and low population density to generate revenue like Uttar Pradesh or Maharashtra. Equity is important for cooperative federalism.

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