SHIMLA/DEHRADUN: With Himalayan states staring at a deepening financial crunch, the Modi government has rolled out a ₹25,000 crore SASCI “Pride of Hills” package to Himalayanstates.
On the face of it, this package is an unmistakable admission of the mounting fiscal stress, shrinking revenue streams, and the gradual withdrawal of earlier support systems like RDG and GST compensation to Himachal and other states.
The timing is crucial. GST compensation is tapering off, and Revenue Deficit Grants (RDG) have been discontinued, leaving hill states scrambling to balance their books.
The worst hit is Himachal Pradesh, which is set to lose nearly ₹9,000 crore annually after the 15th Finance Commission pulled the plug on RDG, which has caused heartburns among people of HimachalPradesh.
The Commission had tied continued support to tough fiscal reforms—cutting non-plan expenditure, tightening Direct Benefit Transfer (DBT) systems, and reining in losses of state-run corporations and keeping its borrowings low.
Those reforms, however, remain a work in progress. Public sector undertakings in Himachal are bleeding close to ₹5,000 crore every year, adding to the already heavy financial burden.
A Timely Breather, Not a Turnaround
In this grim backdrop, the SASCI package arrives as a much-needed breather. With ₹3,920 crore earmarked, Himachal Pradesh gets some immediate fiscal space to keep essential spending and development works going.
Other hill states like Uttarakhand and Arunachal Pradesh face similar pressures—thin revenue bases, high cost of infrastructure, and heavy dependence on central funds.
Big Announcement, Blurry Details
But even as the headline numbers grab attention, the fine print is missing.
Among the major questions that remain unanswered are: Will states have to bring in matching funds?
Will releases be tied to reforms and performance targets? Will the money come freely or in staggered instalments?
The Centre has not clarified the framework, keeping state governments in a holding pattern. The state governments have yet tate their call on the package—they as of now are clearly reading between the lines.
There is no denying that SASCI offers immediate relief. But it does little to fix the deeper cracks—weak revenue generation, rising debt, and inefficient public spending.
For Himachal Pradesh, this package may help steady the ship for now, but the larger storm remains. Without RDG and with limited internal resources, the state’s long-term fiscal health is still under strain.
SASCI signals that the Centre is stepping in as hill states struggle to stay afloat. But until the terms of funding are spelled out, the package remains a promise with question marks.
State-wise Allocation (₹ in crore)
Arunachal Pradesh – 4,900
Himachal Pradesh – 3,920
Nagaland – 3,880
Uttarakhand – 3,460
Tripura – 3,450
Manipur – 2,400
Meghalaya – 2,070
Sikkim – 820
Mizoram – 100
According to the government note, Funds Are Meant For: Boost capital expenditure (roads, infrastructure, connectivity), Support development projects in remote areas, Help states manage committed financial liabilities
The fund intends to accelerate overall economic growth in hill regions.
It needs to be mentioned that that Prime Minister Narendra Modi while on tour after the 2025-26 disaster hit Himachal last year had announced Rs 1500 package. Will this SASCI fund be a part of that, nobody knows.
For now, it is a lifeline. Whether it becomes a lasting solution—or just delays the next crisis—will depend on how, and on what terms, the money actually flows.
#SASCI #HimachalPradesh #FiscalCrisis #GSTCompensation #PublicFinance
