CM Sukhu Highlights Fiscal Stress, GST-Related Revenue Challenges Facing Himachal

Shimla (Himachal Pradesh), January 18, 2026 :
Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu on Saturday sounded a strong warning over the state’s mounting fiscal stress, attributing long-term revenue losses to the Goods and Services Tax (GST) regime and declining central support.

Addressing the media in Shimla a day after returning from New Delhi, Sukhu said he had raised these concerns before the 16th Finance Commission and senior Union ministers, stressing that hill states like Himachal Pradesh cannot be evaluated using the same financial benchmarks as large, consumption-driven states.

“The GST framework is inherently consumption-based. Himachal is largely a production state, but the tax benefits flow to high-population, high-consumption states. Under the present system, Himachal will never receive its rightful share,” Sukhu said.

The Chief Minister pointed out that Revenue Deficit Grants (RDG) to the state have steadily declined over successive Finance Commissions, placing increasing pressure on the state’s finances. While the 15th Finance Commission had approved substantial RDG, phased reductions have forced the state to enforce strict fiscal discipline, he added.

Referring to the pre-GST era, Sukhu said industrial hubs such as Baddi had earlier generated significant revenues through VAT and excise duties. Although GST-related losses were compensated initially, the relief was time-bound and has since tapered off. He also flagged that reductions in GST rates—particularly for the cement sector—have further eroded Himachal’s revenue base.

The Chief Minister also highlighted the disproportionate financial burden of disaster management in hill states, noting that rebuilding roads, bridges, and public infrastructure in mountainous terrain costs far more than in the plains. He urged that national disaster assessment norms be recalibrated to reflect these realities.

On pension reforms, Sukhu reiterated that the restoration of the Old Pension Scheme (OPS) was a considered, long-term policy decision and not a political move, adding that the state took the step despite severe fiscal constraints.

He further said that discussions were held with Union Commerce Minister Piyush Goyal on apple imports and with the Union Power Minister on pending hydropower royalty issues. “The state government will continue to pursue all outstanding matters to protect Himachal’s economic interests,” he asserted.