Shimla, February 8, 2026:
On Sunday, Chief Minister Thakur Sukhvinder Singh Sukhu presided over a crucial Cabinet meeting here to review and deliberate on the Central government’s decision to abolish the Revenue Deficit Grant (RDG) for Himachal Pradesh, a move the state government says has severely impacted the state’s finances.
During the meeting, the Cabinet held detailed discussions on the fiscal fallout of the withdrawal of RDG, which had long been a vital support mechanism for hill states to bridge the gap between revenue expenditure and receipts.
The Chief Minister apprised ministers of the financial strain the decision has placed on the state’s ability to sustain welfare schemes, development works and routine administrative spending.
The Cabinet expressed serious concern over the Centre’s move, pointing out that Himachal Pradesh’s tough terrain, scattered population and high cost of infrastructure delivery make special financial support unavoidable.
Ministers observed that hill states cannot be treated at par with plain states under uniform fiscal norms.
Sources said the meeting also reviewed possible options available to the state, including taking up the issue strongly with the Union government and examining legal and constitutional remedies.
The Chief Minister reportedly maintained that the state has been following fiscal discipline despite inherited liabilities, and that the sudden withdrawal of RDG was neither fair nor justified.
The Cabinet discussed preparing a detailed representation to the Centre, supported by data on revenue losses and additional expenditure burdens, to seek restoration of RDG or an alternative compensatory mechanism. Further decisions are expected after consultations with financial and legal experts.
