The 16th Indian Finance Commission led by its Chairman Arvind Panagariya recently held important consultations with the Himachal Pradesh government regarding central grants allocation in the coming years. While the hilly state had hoped for additional ‘green bonus' funds to compensate for its environmental protection efforts, Panagariya stated it was too early to comment on this possibility.
Panagariya acknowledged HP's unique needs cannot be assessed in isolation from other states. With a debt of over Rs. 80,000 crore and limited revenue streams, HP is optimistic following positive discussions with CM Sukhu. However, Panagariya highlighted all 28 states must be factored in an equitable framework by the October 2025 deadline.
During discussions, CM Sukhu highlighted HP's challenging terrain drives higher infrastructure development costs versus plains. He urged liberal assistance considering the state's border area development needs and disaster management challenges. Leader of Opposition Jai Ram Thakur also advocated special grants to boost connectivity and tourism infrastructure like the Mandi and Kangra airports.
While praising HP's educational and healthcare achievements, Panagariya said the Finance Commission is a neutral body that will thoroughly examine each state's case before finalizing the critical funding policy in 2026-31. With HP's unique economic challenges and environmental stewardship in focus, stakeholders will watch closely for a potentially increased allocation to support continued progress.
