Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu attended the 11th Governing Council meeting of NITI Aayog in New Delhi on 12 June 2026, chaired by Prime Minister Narendra Modi, and placed the state's financial difficulties and special challenges before the national planning body.

Context

Sukhu told the Council that the cessation of revenue deficit grants has dealt a serious blow to the state's finances. He argued that the current central assistance of Rs 25,000 crore is insufficient to sustain development works and urged that it be doubled to Rs 50,000 crore.

The Chief Minister also flagged that Rs 1,500 crore in disaster relief assistance remains unreleased, and that GST implementation over the past eight years has caused the state a cumulative revenue loss of approximately Rs 25,000 crore.

Policy Backdrop

The 15th Finance Commission provided revenue deficit grants to hill states for the period 2021–26, and the tapering of those grants has left states such as Himachal Pradesh with widening fiscal gaps. The GST compensation mechanism, which assured states five years of protected revenue, concluded in June 2022, compounding the shortfall.

Sukhu cited findings by the Indian Institute of Forest Management (IIFM), which estimates that Himachal Pradesh provides ecological services worth approximately Rs 90,000 crore per year to the country, yet receives no formal financial recognition for this contribution. He also pointed to an imbalance in the distribution of benefits from the state's approximately 13,000 MW hydropower potential, and said dues of roughly Rs 7,000 crore from the Bhakra Beas Management Board (BBMB) remain pending.

Stakeholders and Impact

The fiscal squeeze directly affects Himachal Pradesh's roughly 75 lakh residents, particularly those dependent on state-funded infrastructure, rural connectivity, and disaster reconstruction in a terrain prone to cloudbursts and flash floods. The hydropower and tourism sectors, two pillars of the state economy, are at the centre of the demands raised.

Sukhu also raised the issue of expanding Gaggal Airport in Kangra district to boost tourism, proposing that Himachal Pradesh be developed as a 'Ek Rajya, Ek Antarrashtriya Destination' ('One State, One International Destination'). Better air connectivity, he argued, is essential for translating the state's natural assets into sustained economic activity.

What's Next

The recommendations of the 16th Finance Commission, expected in 2026–27, will be closely watched by hill states seeking a more equitable fiscal framework. Any NITI Aayog follow-up on the pending central releases — particularly the disaster relief funds and BBMB dues — will determine how quickly the state can resume stalled development projects.

Progress on the Gaggal Airport expansion under the Airports Authority of India's annual plans will be a key indicator of whether the Centre responds to Himachal Pradesh's tourism-connectivity pitch. The broader question of formally valuing ecosystem services provided by hill and forest states is likely to gain traction as the Finance Commission deliberations advance.