The 16th Finance Commission's visit to Himachal Pradesh sparked discussions on freebies, green cover compensation, and financial challenges, accentuating the state's unique needs and contributions
The 16th Finance Commission will address issues related to the distribution of freebies and compensation for providing green cover, stated Chairman Arvind Panagariya.
Following a productive meeting with the Himachal Pradesh government, Chairman Panagariya acknowledged the state's unique challenges. He reiterated that he understood that the cost of living in the hill state is significantly higher due to its difficult terrain.
In response to a question, the chairman said, "The commission will also address the issue of freebies, as we are aware that freebies have increased, and there is a competition among states and political parties to give freebies."
It is worth mentioning that the state's Congress government had promised to give Rs 1,500 per month to women aged 18 to 59 years in its poll manifesto, released on the eve of the last assembly polls held in 2022.
He further mentioned that the Finance Commission has been a neutral body since 1952 and functions professionally. This is the first state consultation, and the commission will visit other states before deciding the parameters on which the recommendations will be based.
Himachal was chosen as the first state as monsoons are arriving, and the state government has to attend to monsoon-related issues. The members added that the old pension scheme is also an issue that would impact expenses.
Addressing reporters later, Chief Minister Sukhvinder Singh Sukhu said, "We have explained the condition of the state and debt liability to the members of the 16th finance commission and apprised them that the previous BJP government took huge loans, and we have to take loans to pay the debt.
The Revenue Deficit Grant (RDG) for this year was just Rs 3,000 crore, compared to the previous government's allocation of around Rs 10,000 crores, according to the Chief Minister. The Chief Minister emphasised that the RDG should be increased for hilly states with difficult terrain, as the cost of construction is higher in such areas compared to plain regions.
The Chief Minister also noted that the parameters for funding should differ between hilly and plain areas, and the funding for disaster relief should also reflect this difference.
Furthermore, the state has been actively contributing to maintaining the green cover of the Himalayan region. However, this has led to significant revenue loss, which has not been compensated. Despite the potential to earn revenue by cutting trees, the state government has placed a complete ban on tree felling. Additionally, the state has not received permission under the Forest Conservation Act (FCA) since 2017.
The Chief Minister urged the Finance Commission to provide generous financial assistance to the state, recognising its contributions to the nation. He highlighted the need to develop the border areas for national security and to provide essential facilities to prevent mass migration from these areas.