Shimla

Himachal Pradesh Public Works Department (PWD) Minister Vikramaditya Singh on Monday expressed disappointment over the Union Budget, saying it failed to address the financial concerns of hill states and terming the discontinuation of the Revenue Deficit Grant (RDG) as “deeply unfortunate” if driven by political considerations.

Addressing reporters in Shimla, Singh said the hill state had hoped for specific support measures in the Budget presented on February 1 by Union Finance Minister Nirmala Sitharaman, but Himachal Pradesh did not find any mention.

“If the Revenue Deficit Grant has been withdrawn due to a political approach, it is extremely unfortunate. This issue will be deliberated at length in the state Cabinet meeting scheduled for Sunday,” the minister said.

Singh noted that Himachal Pradesh had been receiving RDG since Independence, which he said played a vital role in maintaining the state’s fiscal stability. “The complete withdrawal of this grant has caused deep anguish among the people. The state government has repeatedly flagged issues affecting Himachal’s interests,” he added.

Stressing that the issue transcends party lines, Singh said it was not a matter of Congress versus BJP. “This is about the people of Himachal Pradesh. All political parties must come together and jointly present the state’s case before the Centre,” he said.

The minister also pointed to the adverse impact of the Goods and Services Tax (GST) regime on hill states. He said Himachal Pradesh earlier generated significant revenue from the cement sector, but the reduction in GST rates from 28 per cent to 18 per cent resulted in substantial losses.

Explaining the structural challenges, Singh said GST is consumption-based and inherently favours populous states. “Himachal Pradesh is a production state. We manufacture cement and pharmaceuticals, but consumption takes place elsewhere, and GST revenue flows to those states. Hill states will never fully benefit under this model,” he said.

He added that prior to GST implementation, Himachal Pradesh used to receive between Rs 3,000 and Rs 4,000 crore, but the shift in the taxation system has diverted revenue away from producing states. Singh said special financial mechanisms were essential for the economic sustainability of hill states.

On disaster-related funding, Singh said existing Disaster Risk Index (DRI) norms fail to reflect the higher costs associated with restoration work in mountainous terrain. “Repairing infrastructure in Himachal is far more expensive than in the plains, yet the parameters remain uniform. Under such conditions, the state can never become revenue surplus,” he said.

Referring to pension reforms, the minister said the New Pension Scheme (NPS) had adversely affected the state’s borrowing capacity, leading to a halt in borrowing of around Rs 1.6 billion. He added that the Old Pension Scheme was restored in the interest of employees, not for political reasons.

Singh also said the state government has raised multiple issues with the Centre, including concerns over apple imports and hydropower royalty. He said discussions were underway with the Commerce Ministry involving fruit growers and state officials, while the issue of hydropower royalty had been taken up with the Union Power Minister.

On infrastructure, Singh said 435 roads under the PWD were currently closed and efforts were ongoing to restore connectivity. He also announced a new drainage policy to minimise road damage caused by water flow from nullahs, stating that V-shaped drains would replace U-shaped ones and be incorporated into future project reports.

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He added that the state government remains committed to improving road infrastructure and reducing losses caused by waterlogging and natural disasters.