SHIMLA, Feb 8: Defending the union Government’s decision to discontinue the Revenue Deficit Grant (RDG), union Culture and Tourism Minister Gajendra Singh Shekhawat on Saturday said the grant was never intended to be a permanent arrangement and that long-term fiscal stability of states can be achieved only through revenue enhancement and strict expenditure discipline.
Addressing a detailed press conference on union Budget here, the union minister said RDG was introduced as a temporary relief measure and had been extended repeatedly since the 12th Finance Commission, even though states were clearly advised to gradually move away from dependence on such support.
The union Minister said that during the 15th Finance Commission period, RDG was front-loaded and expanded due to extraordinary circumstances such as the COVID-19 pandemic, and Himachal Pradesh received substantially higher assistance during that phase than in earlier periods.
He noted that the 16th Finance Commission has instead provided for higher tax devolution to states, which, if backed by prudent financial management, can significantly offset the impact of the withdrawal of RDG. Expressing concern over Himachal’s debt-to-GSDP ratio crossing 40 per cent, he said this highlighted the urgency for structural fiscal reforms rather than political rhetoric.
Shekhawat further said that the Centre continues to support Himachal Pradesh through several channels, including a 50-year interest-free loan under the Special Capital Assistance Scheme for tourism infrastructure, apart from assistance under Swadesh Darshan, PRASAD and other destination-based schemes.
On disaster management, he said allocations to the SDRF and NDRF have been enhanced manifold in recent years, enabling states to invest not only in relief but also in preventive measures.
On agriculture and apples, he rejected claims of adverse impact from trade agreements, stating that minimum import price norms and duties adequately safeguard domestic orchardists.
It is worthwhile that Himachal already facing a severe financial crunch amid frequent natural disasters, has expressed serious concern over the discontinuation of RDG under the 16th Finance Commission.
The Congress-led state government has claimed that the move would leave the state with a revenue gap of about Rs 6,000 crore per annum for the next five years. It has also alleged political bias, pointing out that the state received around Rs 38,000 crore as RDG during the 15th Finance Commission period.
Himachal is among 17 states excluded from RDG in the current Finance Commission cycle, a decision the state says comes at a time when its limited revenue base and rising disaster-related expenditure have stretched finances to the limit.
(UNI)
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