Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu announced on Saturday, 13 June 2026 that the state government is withdrawing its earlier partial salary-cut notification and will release pending salaries — along with three months of arrears — to senior officials and elected representatives starting next month, even as he said the Centre has withheld Revenue Deficit Grants worth approximately Rs 10,000 crore that the state has been receiving since 1952.

Context

In a post on X, CM Sukhu stated: 'हिमाचल प्रदेश को वर्ष 1952 से लगभग 10 हजार करोड़ रुपये की RDG मिल रही थी, जिस पर केंद्र सरकार ने रोक लगा दी है' ['Himachal Pradesh has been receiving approximately Rs 10,000 crore in RDG since 1952, which the Central government has now stopped']. He added that despite this, the state had strengthened its economy through limited resources and financial discipline, and was now rolling back the partial salary-cut order. The Chief Minister also noted that his own salary cut would remain in place.

Policy Backdrop

The Revenue Deficit Grant (RDG) is an untied transfer recommended by successive Finance Commissions to states that report a revenue deficit after tax devolution and other central transfers. The 15th Finance Commission recommended RDG tranches for Himachal Pradesh covering the 2021–26 period, recognising the state's structural dependence on central support given its difficult terrain, limited tax base, and high per-unit cost of delivering public services. A stoppage or delay in these grants directly squeezes the state's ability to meet its committed expenditure, including salaries for government employees.

The dispute fits a broader pattern in which opposition-ruled states have publicly flagged delays or curtailment of Finance Commission-mandated transfers, framing it as a centre-state fiscal tension. Himachal Pradesh, governed by the Indian National Congress since December 2022, has been among the states most vocal about this pressure.

Stakeholders and Impact

The immediate beneficiaries of the salary restoration are the state's Chief Secretary, Additional Chief Secretaries, Deputy Commissioners, MLAs, and Cabinet Ministers, who will receive their regular salaries plus three months of arrears from next month. For the broader cadre of state government employees, the withdrawal of the partial salary-cut notification signals a degree of fiscal stabilisation after a period of austerity. CM Sukhu underscored that his own pay cut would continue, a gesture aimed at signalling personal accountability amid the fiscal strain.

The stoppage of RDG flows, if sustained, would widen the state's revenue gap and could force difficult trade-offs between capital spending and committed liabilities in the 2026–27 budget cycle. Himachal Pradesh's economy is heavily reliant on horticulture, tourism, and hydropower, sectors that require sustained public investment to remain competitive.

What's Next

The outcome of 16th Finance Commission deliberations will be closely watched, as the new award period will determine the quantum and eligibility of RDG for states like Himachal Pradesh beyond 2026. Any supplementary grant announcements in the 2026–27 Union Budget could also partially offset the impact of the current stoppage. CM Sukhu closed his post with a firm commitment: 'हमारी सरकार हिमाचल प्रदेश को आत्मनिर्भर बनाने के लिए सभी आवश्यक निर्णय दृढ़ निश्चय के साथ लेगी' ['Our government will take all necessary decisions with firm resolve to make Himachal Pradesh self-reliant'], signalling that the state intends to reduce its structural dependence on central transfers over the medium term.